Bolivia faces deepening economic crisis at start of election year

Cesar Uco

Bolivia’s ruling party, the Movement Toward Socialism (MAS in Spanish), enters 2025 deeply divided, confronting a growing economic crisis and a challenge in the country’s August presidential elections from neo-fascist and far-right movements centered in Santa Cruz de la Sierra.

Evo Morales and Luis Arce [Photo: comunicacion.gob.bo]

President Luis Arce last month issued an arrest order for ex-president Evo Morales (2006 – 2019), his former ally and now rival, based upon an investigation into allegations of rape and human trafficking. The move has sparked anger among Morales supporters, who have announced plans for mass mobilizations starting as early as January 10.

The main demand raised by protesters has until now been the release of individuals arrested during previous demonstrations. At least 90 people were detained during blockades erected in October and November 2024.

These recent developments take place at the start of a year pregnant with explosive class struggles in a country plagued by poverty and oppression, particularly of the indigenous population in the Andes and the Amazon basin. All factions of the ruling class are now scrambling to divert growing social tensions behind one or another representative of the capitalist political establishment.

With the World Bank reporting a per capita income of $6,686, Bolivia ranks the poorest among the nations of South America. In 2024, inflation reached 8.82 percent, the highest level seen in the 16 years since the Great Recession of 2008.

The government blames Morales's supporters for the 2 percent jump in the inflation rate, citing the 10-day roadblocks last January and 24 days of protests in October and November. These protests significantly impacted food and fuel prices, disrupting production and trade.

Particularly steep was the 1.46 percent November hike in prices, amounting to an annual rate of 19 percent. Basic products such as beef, rice, and interdepartmental transport saw sharp price rises. The increasing cost of the basic food basket is causing significant discontent among Bolivia's workers and poor.

Hoping to avert a massive uprising, President Luis Arce has implemented economic measures including price controls, targeting essentials like bread and pork, aimed at combating inflation.

These measures have, however, led to dissatisfaction among small business owners who are struggling with rising costs and are unable to sell their goods at a profit. Bakers have protested, demanding a 40 percent increase in bread prices—from 0.50 to 0.70 bolivianos—citing a spike in the cost of flour imported from Argentina.

Especially affected is El Alto, the densely populated working-class city neighboring La Paz. The Regional Federation of Trade Unions of El Alto has threatened a march on La Paz.

Additionally, the ongoing fuel shortage has caused long queues at supply stations. In areas like Puerto Suárez in Santa Cruz, which borders Brazil, residents have reported waiting in line for up to eight days to receive fuel, leading to threats of blockades to demand fuel supplies.

Similar situations have been observed in Chulumani, located in the Yungas region near La Paz. Juan Yujra, a representative of the heavy transport sector in Santa Cruz, commented, 'Difficulties persist in purchasing fuel in the provinces, which affects the economic and productive activity of each region.' However, Armin Dorgathenr, the executive president of the state oil company, claimed that distribution is 'normal' across the national territory.

Since the beginning of 2023, Bolivia has been grappling with a shortage of dollar liquidity, leading to the currency being sold on the black market for nearly double its official price of 6.96 bolivianos. Currency devaluation is a major factor behind rising inflation.

The increasing economic problems have intensified the conflict between MAS leaders, especially after Morales accused Arce of deploying “elite agents of the Bolivian state” to assassinate him after shots were fired at his caravan. This led Morales to mobilize his base, implementing numerous roadblocks and disrupting economic activity.

The Bolivian bourgeoisie has responded by pressuring the MAS ruling party for “effective measures,” including “austerity and the implementation of structural and urgent actions, … [to] guarantee private investment, encourage national production, and promote exports,” according to Giovanni Ortuño, president of the Confederation of Private Entrepreneurs of Bolivia (CEPB).

On December 18, 2024, to capitalize on the divisions within MAS, extreme-right politicians, including former presidents Carlos Mesa (2003-2005) and Jorge 'Tuto' Quiroga (2001-2002), along with businessman Samuel Doria Medina and representatives of Santa Cruz governor and leader of the right-wing Creemos party Fernando Camacho, signed an agreement aimed at unifying the right behind a common presidential candidate to remove the MAS from power.

Camacho faces trial for his role in ousting Evo Morales from the presidency amid allegations of electoral fraud following the annulled 2019 elections and demands by the military, the US embassy and the union bureaucracy for his resignation in what constituted a coup d’état.

The World Bank in its latest report on Bolivia warns that:

After the commodities boom ended in 2014, Bolivia resorted to high public spending and increasing domestic credit to sustain economic growth. This approach led to rising public debt, dwindling international reserves, and fiscal savings accumulated during the boom. The situation worsened due to the COVID-19 pandemic, which plunged the economy into recession and heightened poverty.

In another report, the WB emphasizes that to “ensure a path of inclusive and sustainable growth, it is essential to address significant structural challenges to strengthen stability, promote private sector development, and protect the most vulnerable.” “Protecting the most vulnerable' is clearly interpreted as conditional upon “stability” and the development of the “private sector.”

Arce and Morales have both accused the United States of interfering in Bolivia's internal affairs and backing their rivals. There is no doubt that Bolivia, which boasts the world’s largest lithium reserves, is a target of Washington’s intrigues. However, neither faction of MAS represents an alternative upon which to base a genuine fight against imperialism.

Far-right Austrian Freedom Party on the verge of heading the government

Markus Salzmann

After the failure of coalition negotiations and the subsequent resignation of Chancellor Karl Nehammer (Austrian Peoples Party, ÖVP), all signs now point to the formation of a government led by the far-right Freedom Party (FPÖ).

On Monday, President Alexander van der Bellen, a former Green Party member, met with Freedom Party leader Herbert Kickl and officially tasked him with forming a government. “I did not take this step lightly,” claimed Van der Bellen, as anti-fascist protesters rallied in front of the Hofburg palace in Vienna. “Respect for the voters’ vote requires that the federal president respects the majority.”

FPÖ leader Herbert Kickl [Photo by C.Stadler/Bwag / CC BY-SA 4.0]

On Sunday, van der Bellen said he had the impression that the voices within the ÖVP that ruled out working with Kickl had become significantly quieter. “This in turn means that a new path may be opening up,” said van der Bellen. It’s clear what this “new path” is all about: the ruling class is seeking to establish a far-right government to implement the policy of rearmament and social cuts pursued by all parties.

The FPÖ made significant gains in September’s parliamentary elections, emerging as the winner. After neither the ÖVP nor the Austrian Social Democratic Party (SPÖ) initially wanted to form a coalition with the FPÖ under its leader Kickl, incumbent Chancellor Karl Nehammer received the government mandate. In mid-November, he entered into coalition negotiations with the SPÖ and the right-wing NEOS (New Austria and Liberal Forum).

On Friday, NEOS pulled out of the negotiations. On Saturday, Nehammer also ended the talks between the ÖVP and SPÖ, which had been continuing in the meantime. Although all three parties have no fundamental differences, the negotiations ultimately failed on the question of how and over what period of time the planned austerity measures should be implemented against the population.

The ÖVP and NEOS called for a brutal and rapid austerity programme to avoid an EU deficit procedure, which Austria is facing due to exceeding the 3 percent limit. The EU Commission expects a budget deficit of 3.7 percent for 2025 and 3.5 percent for 2026.

The SPÖ advocated offsetting the deficit over a longer period. Essentially, this would mean the same burdens for the population; the government would merely have more leeway to avoid a social confrontation.

In addition, the SPÖ called for the introduction of a wealth tax to balance the budget. Although this would never be more than symbolic, the proposal was vehemently rejected by the ÖVP and NEOS.

NEOS party leader Beate Meinl-Reisinger justified her party’s withdrawal by saying the social attacks were not comprehensive enough. The party is considered the most aggressive defender of the interests of the upper-middle class, which views any social equalisation measures as a curtailment of its own wealth and interests.

Observers of the negotiations noted that NEOS wanted to push through its programme—brutal pension cuts, curtailment of public healthcare and public education, and the end of the country’s military neutrality—without any compromises.

Nehammer gave similar reasons for his resignation and the failure of the talks with the SPÖ, saying it was “evident that the destructive forces in the SPÖ have gained the upper hand.” His party would not sign a programme that was “hostile to business, competition and achievement.”

In fact, the SPÖ does not in any way advocate such a programme. It simply considers such an open attack on the working class to be too risky, as it would inevitably trigger massive opposition that the trade unions might no longer be able to control. The SPÖ is concerned with better disguising the anti-working class and militaristic policies in order to stifle resistance to them.

Nehammer’s resignation has now cleared the way for a government of the far right able to push ahead with radical budget cuts, rearmament, increasing state powers at home and a tightening of restrictive anti-refugee policies.

Kickl himself is on the far-right of the European far right. He began his political career as a speechwriter for Jörg Haider, who transformed the FPÖ into an openly far-right party. He later fell out with Haider and attacked him from the right. From December 2017 to May 2019, he served as Austrian interior minister under ÖVP chancellor Sebastian Kurz, making a name for himself as a law-and-order politician, pursuing an aggressive anti-refugee policy and getting involved in several scandals. In June 2021, he was elected FPÖ leader.

Kickl has appeared at demonstrations against coronavirus protection measures and maintains close ties to German and European neo-Nazis. In 2016, for example, he spoke at the “Defenders of Europe” congress in Linz, which was also attended by well-known right-wing extremists such as Compact editor Jürgen Elsässer, far-right ideologue Götz Kubitschek, the Identitarian Movement and the German network “One percent for our country.”

The ÖVP leadership met at the Federal Chancellery on Sunday and quickly agreed on Nehammer’s successor, the party’s current Secretary General Christian Stocker, considered a loyal representative of the right wing of the party.

For a short time, former Chancellor Sebastian Kurz was considered for this position. According to the dpa news agency, however, he was unavailable. As could be seen from press releases, Kurz would only have been willing to take over the party chairmanship if he simultaneously held the office of Federal Chancellor.

Although Stocker had previously spoken out against negotiations with an FPÖ led by Kickl, he now stated he was ready to negotiate with them. He said that they would be willing to hold such talks if invited to do so and assumed Kickl would be tasked with forming a government.

Stocker emphasised that the Alpine republic now urgently needed a government, and that this was the priority, saying the ÖVP would not shirk this national duty. He did not address the question of whether he would be available as vice chancellor in such a government.

If the ÖVP and FPÖ are unable to form a coalition, fresh elections would likely be the alternative. According to the latest polls, the FPÖ would increase its lead further and win around 35 percent.

In September, the FPÖ gained around 13 percentage points compared to the 2019 election, taking it to 29 percent, while the ÖVP, which had previously governed with the Greens, lost almost as much. The SPÖ was also unable to capitalise on its role in opposition, losing half a percentage point since the last election.

Since then, the far-right has already been heavily integrated into the government and entrusted with important offices. Walter Rosenkranz, a representative of the far-right, holds the office of President of the National Council, the second-highest in the state. In a secret ballot, 100 of the 183 parliamentarians voted for Rosenkranz. The FPÖ itself has only 57 seats, so he received at least 43 votes from other factions.

The party is now part of five state governments in Austria, and in Styria it even provides the state governor.

Developments in Austria are not an isolated case. Across Europe, the rise of far-right extremist forces has been driven by the right-wing and anti-working class policies of the establishment parties and their pseudo-left appendages. Similar to the dissolution of the French parliament by Emmanuel Macron, the calling of new elections in Germany was also guided by the consideration of bringing a government to power that can aggressively enforce a brutal policy of war and austerity against the population.

Crisis in UK special needs education escalates as Labour announces a fraudulent inquiry

Tania Kent

The crisis in Special Educational Needs and Disabilities (SEND) funding and placements in Britain continues to expand as councils—tasked with providing placements and resources—face imminent bankruptcy. Families, sometimes waiting years to receive educational support for their children, are at breaking point.

The need for SEND placements had already surged to over half a million (576,000) as of January 24 last year, while education funding is still at 2009/10 levels in real terms after over a decade of austerity.

Families have a statutory right to demand their local authority provide Education and Health Care Plans (EHCP) to children who have been identified as having a special educational need, granting them additional support to access learning—including one-on-one support, transport services and, in some cases, access to private education.

According to analysis by the Guardian, more than £100 million was spent last year by local authorities and the government on failed efforts to block this support. They won just 136 out of more than 10,000 tribunals in 2022-23, a success rate of 1.2 percent.

Prime Minister Keir Starmer and Education Secretary Bridget Phillipson in June 2024. [Photo by Keir Starmer / Flickr / CC BY-NC-ND 2.0]

A spokesperson for the Independent Provider of Special Education Advice, a charity providing free legal support to families, said, “It’s hard to avoid the conclusion that local authorities must calculate, at some level, that it costs them less to contest tribunal appeals, even if they lose, than to provide every child and young person with what the law entitles them to as a matter of course—because the majority of families don’t [or] can’t appeal.”

In 2022-23, the SEND tribunal registered 13,658 appeals against EHCP decisions, a 24 percent increase from the 11,052 the previous year. The latest data, published last month, showed that tribunal costs will continue to surge after 21,000 appeals were registered in 2023-24—an annual increase of 55 percent. Only 17,000 were concluded, adding to the 9,000-case backlog.

The number of children and young people requiring special education needs support in England has more than doubled over the past decade, according to the National Audit Office (NAO). Almost five percent of all students now have a special needs plan, up from a steady rate of 2.9 percent between 2000 and 2018, according to the IFS.

Meanwhile, local government funding has collapsed, with several authorities already going bankrupt and dozens more at risk. SEND costs are a major factor. According to an estimate by the IFS, councils will be running a collective £3.3 billion high-needs provision budget deficit this year, which it warned could rise to £8 billion in the next three years.

Lack of places is a major problem, with two-thirds of special schools full or over capacity. Tory and Labour government plans for expansion are grindingly slow. Of the just 67 new special schools in the pipeline, almost a third were approved more than four years ago, according to the Financial Times. Only 36 state special schools are expected to open by 2025-26, down from a previously estimated 47—plus four “alternative provision” schools, down from 6.

A lack of state-maintained places means local authorities are increasingly having to turn to costly private providers, who are making fortunes out the expanding business. While the number of local authority special school increased just 6 percent between 2018-19 and 2022-23 (to 1,050) the number of independent special schools increased 49 percent to 728.

A SEND place in the state sector costs an average of £24,000 a year, versus £62,000 in the private sector. In total, private places cost councils £2 billion in 2022-23, up 46 percent since 2018.

Among the beneficiaries is Outcomes First Group, which increased its revenues by 87 percent between 2019 and 2023, with profits up almost ninefold from £3.3 million to £27 million. Witherslack Group’s revenues went up 130 percent in the same period, while profits more than tripled to £36 million. Both Outcomes First and Witherslack are owned by private equity groups.

The previous Conservative government allowed councils’ high-needs deficits to sit off their balance sheets to avert a wave of bankruptcies. Originally in place until 2024, this “statutory override” was extended to March 2026 on the understanding that 10 councils would otherwise have had to formally declare bankruptcy “overnight”. The National Audit Office has warned that four in ten councils are likely to be at risk of bankruptcy with the expiration of the new deadline.

Government SEND “bailouts” have meanwhile been made to the tune of £1 billion pounds, always at the cost of “reforms” cutting provision. One council refused a deal because it said expected cuts would break the law.

This is the direction of travel. Last month, Education Secretary Bridget Phillipson announced a paltry £740 million capital allocation for mainstream schools to adapt buildings and facilities to accept more SEND pupils. Labour’s main plan is to restrict eligibility for support.

At end of December 2024, MPs on Parliament’s cross-party education select committee announced a SEND inquiry. Like all previous inquiries into the crisis in education, it will provide a pretext for slashing government provision in the name of efficiency and giving handouts to the private sector.

Education Committee Chair Helen Hayes MP made clear the primary concern of the announced inquiry is the financial drain on the government purse. “This crisis has many symptoms that bleed into the rest of the education system: from attrition in the teaching workforce to soaring levels of pupil absence. There are also symptoms which blight local councils’ budgets—ever increasing spending on transporting pupils to settings far from where they live, and the chaos of money being poured into tribunals that parents are expected to win,” she said.

According to analysis by the Financial Times, thousands fewer students could be entitled to the full package of special educational support in England under changes being considered by Labour. The proposals involve changes to the system that underpins the provision of support, likely to affect children on the “lighter” end of a range of conditions such as ADHD and autism spectrum disorder, according to a senior official. “It would mean thousands fewer pupils getting statements,” they said.

The continued starving of resources to SEND is of a piece with Labour’s taking fuel allowances from pensioners, refusing to scrap the two-child benefit cap, and insistence on 5 percent “efficiencies” in every department. Growing private sector involvement in special educational needs provision aligns with the government’s plans for the National Health Service. The only area of state spending for which Starmer insists money must be found at all costs is on the military.

OSV Fellowship and Grant Program 2025

Application Deadline:

The application deadline is February 28, 2025.

Tell Me About The OSV Fellowship and Grant Program:

The O’Shaughnessy Fellowships & Grants is a prestigious one-year program offering a $100,000 equity-free grant to individuals working on bold and innovative projects. The fellowship supports researchers, builders, and creatives by providing them with the resources to bring their ideas to life while allowing them to retain full ownership of their work. The program unites visionary individuals from diverse fields, helping them develop new ideas and positively impact the world. Through the fellowship, winners gain access to a powerful network of investors, partners, and mentors, enabling them to collaborate and further their work. Over the past two years, O’Shaughnessy Ventures has funded 55 remarkable innovators across 140 countries, supporting the development of groundbreaking projects such as documentaries, startups, non-profits, and scientific research.

Which Fields are Eligible?

All fields 

Type:

Fellowship 

Who can Apply For The OSV Fellowship and Grant Program?

Additionally, applicants must ensure they meet the following criteria:

• Individuals must be over 18 years of age.
• The fellowship is open to applicants worldwide, regardless of background.
• Applicants must have a strong portfolio of proof of work.

How are Applicants Selected?

• Personal Agency: Applicants must have a demonstrated ability to shape their future through initiative and proactivity.
• Exemplary Proof-of-work: A strong portfolio of impactful projects.
• Resourcefulness: The ability to maximize available resources to achieve goals.

Which Countries Are Eligible?

All countries

Where will the Award be Taken?

Remotely 

How Many Awards?

• Ten Fellowships will be awarded.
• In addition, up to twenty individuals will receive $10,000 grants.

What is the Benefit of the OSV Fellowship and Grant Program?

Furthermore, the fellowship comes with the following benefits:

• $100,000 equity-free grant.
• Access to a global network of investors, mentors, and partners.
• A chance to work alongside other high-caliber innovators.
• Direct support for turning ideas into reality without the pressure of debt.
• Opportunities for post-fellowship equity fundraising.

How Long Will the Award Last?

One year 

How to Apply:

Complete the Fellowships & Grants application form available on the website.

AFS Global STEM Academies Scholarships 2025

Application Deadline:

The application deadline is January 15, 2025.

Tell Me About The AFS Global STEM Academies Scholarships 2025:

The AFS Global STEM Academies is a prestigious, full-scholarship program designed for talented and diverse youth from 15 countries worldwide. This program integrates virtual and in-person learning to equip scholars with STEM skills, intercultural understanding, and sustainability knowledge through an interactive, hands-on curriculum. Sponsored by bp, the program focuses on sustainability and the UN Sustainable Development Goals, combining a 12-week virtual e-learning curriculum with a 4-week immersive experience abroad. Participants engage in workshops, social impact projects, and cultural immersion while earning the Advanced Certificate on Global Competence for Social Impact awarded by AFS and the University of Pennsylvania Center for Social Impact Strategy.

Which Fields are Eligible?

STEM and sustainability with a focus on the UN Sustainable Development Goals.

Type:

Scholarship 

Who can Apply For The AFS Global STEM Academies Scholarships 2025?

Additionally, the eligibility criteria include:

• Birthdate must fall between September 1, 2007, and April 1, 2010.
• Applicants must be aged 15–17.5 years at the program start date.
• Must be a citizen or legal resident of one of the eligible countries.
• Must be able to participate fully in English in both online and classroom settings.
• Must be able to travel unaccompanied to any of the four Academy destinations: Brazil, China, Egypt, or India.
• Strongly encouraged to apply: young women, underrepresented populations, and students with high financial need.

How are Applicants Selected?

• Demonstrated academic potential and interest in STEM and sustainability.
• Ability to fully engage in virtual and in-person program components.
• Strong problem-solving, analytical, and social innovation skills.
• Commitment to global citizenship and social impact.

Required Documents:

The following documents are also necessary:

• Completed online application form.
• Proof of nationality or legal residency in an eligible country.
• Parental consent forms (if applicable).
• Any additional supporting documents requested by AFS.

Which Countries Are Eligible?

The following countries are eligible: Azerbaijan, Brazil, China, Egypt, Hungary, India, Indonesia, Japan, Malaysia, Mexico, Singapore, South Africa, Spain, Trinidad & Tobago, United Kingdom, USA.

Where will the Award be Taken?

A 12-week virtual program (from home) followed by a 4-week immersive study abroad experience in Brazil, China, Egypt, or India.

How Many Awards?

Not specified

What is the Benefit of the AFS Global STEM Academies Scholarships 2025?

Additionally, the benefits include:

• Comprehensive orientations.
• Cultural tours and field trips.
• Housing, meals, and domestic transport.
• Round-trip airfare and airport pick-up.
• 24/7 emergency and intercultural support.
• Medical insurance.
• Visa application assistance.
• Advanced Certificate on Global Competence for Social Impact.

How Long Will the Award Last?

16 weeks (12 weeks virtual + 4 weeks abroad).

How to Apply:

• Visit the official AFS Global STEM Academies application portal.
• Complete the online application form.
• Upload required documents and supporting materials.
• Submit the application before the deadline of January 15, 2025.

Stock market bubble gets even bigger

Nick Beams

The extent of the divorce between the US stock market and the financial system more broadly from the underlying real economy is revealed in the rise of Wall Street’s benchmark S&P 500 index for the past two years.

For the second year in a row, the index rose by more than 20 percent, despite a selloff of 2.5 percent in December.

A sign for a Wall Street building, Wednesday, May 19, 2021, in New York [AP Photo/Mark Lennihan]

The market was up by 23.3 percent for 2024 following a 24.2 percent rise the previous year. This is the largest two-year hike this century and brings to four the number of S&P gains exceeding 20 percent in the past six years.

The market has risen by more than 40 percent in the past two years not because of growth in the US economy, running at a fairly modest rate of 3 percent, but on the hype and expectations surrounding high-tech stocks, especially those associated with the development of artificial intelligence (AI).

It has also been boosted by the expectation that the incoming Trump administration will be very favourable for corporate and finance capital both through tax cuts and the scrapping of what remains of regulations in a number of areas.

The rise in the market has also been propelled forward by expectations that the Federal Reserve will cut interest rates further in 2025, although that sentiment appeared to have cooled somewhat after its December meeting. Chair Jerome Powell indicated a more “cautious” approach to further rate cuts and members of the governing body reduced their expectation of the number of interest rate cuts in the coming year from four to two.

There are concerns in the Fed’s policymaking bodies that the increases in tariffs foreshadowed by Trump—60 percent on Chinese goods and up to 20 percent on those from other countries—could push up inflation and create less space for interest rate reductions.

As always when the stock market is on a tear, there are those who maintain it is set to go even higher. At the beginning of December, a monthly survey conducted by the Bank of America reported that the long-term exposure of asset managers to the S&P 500 had risen to the highest level in 20 years. This indicated what it called a “super-bullish sentiment.” Deutsche Bank reported that retail investor enthusiasms for stock market gains had never been higher.

According to Benjamin Bowler, a strategist at Bank of America whose remarks were cited in a Financial Times report, Trump’s “laissez-faire economics, tax cuts and deregulation” together with a potential “AI revolution” meant the stock market climb would continue in 2025. While 2024 was a “good year” for stocks, “it may only be the beginning.”

Amid the market hype, warnings are being sounded because of the state of the global economy and the impact of Trump’s “America First” policies.

According to a survey of economists conducted by the FT and the Booth School of Business at Chicago University, many believe that Trump’s policies will boost inflation and lead to a more cautious approach by the Fed on interest rate cuts.

“Trump’s policies can bring some growth in the short term, but this will be at the expense of a global slowdown which will then come back and hurt the US later on,” Şebnem Kalemli-Özcan, a professor at Brown University and an advisor to the New York Fed, told the FT.

“His policies are also inflationary, both in the US and the rest of the world, hence we will be moving to a stagflationary world.”

There are growing indications that stagnation is taking hold in major components of the global economy. The eurozone is barely growing with its major economy, Germany, confronting its worst downturn in the post-war period as jobs are slashed in its major industries, above all auto production.

The chief economist at one German bank told the FT Europe was soon going to resemble the “late Hapsburg empire” falling behind economically and technologically and dominated by “melancholic remembrance of its former greatness.”

China is struggling to reach its target of around 5 percent growth for 2024—most observers consider it will make the target but there is considerable scepticism about the accuracy of official data—and the predictions are that growth will trend down in 2025.

Concerns in the Chinese leadership were reflected in the New Year address by president Xi Jinping, in which he directly warned about the state of the economy, rather than simply extolling the accomplishments of the regime over the previous year.

He warned that the economy was facing “some new situations” and there were “challenges from the uncertainty of the external environment” (an oblique reference to Trump’s tariff hikes) and pressure from the “transformation of new and old drivers.”  The term old driver refers to the severe downturn in the property and real estate market, which has been a mainstay of Chinese growth since the global financial crisis of 2008.

As far as financial conditions are concerned, the main issue is the increased role played by private equity markets. The global consultancy firm McKinsey estimates that private markets’ assets under management reached $13.1 trillion in mid-2023 and has been increasing at around 20 percent per annum since 2018.

Commenting on these figures, FT columnist John Plender noted that one outcome “is a significant increase in the proportion of the equity market and the economy that is non-transparent to investors, policymakers and the public.”

Major financial institutions, including the International Monetary Fund, the Bank for International Settlements and the Fed, have indicated that they have no real idea of the operations of the private equity markets and their interconnections with major banks.

As Plender commented, “private equity credit funds pose a unique set of potential systemic risks to the broader financial system because of their interrelationship with the regulated banking system, the opacity of the terms of their loans, the illiquid nature of their loans and potential mismatches with the needs of limited partners (investors) to withdraw funds.”

In other words, major problems could be building up in the financial system, even as the stock market surges ahead, of which regulators would only become aware when they burst over their heads.

There were, he concluded, “no prizes for guessing where the next financial crisis will emerge from.”

Japanese cabinet earmarks record 8.7 trillion yen for war

Ben McGrath

At the end of December, the cabinet of Japanese Prime Minister Shigeru Ishiba approved a new record-high military budget for 2025. It is the 13th consecutive year that Japan has increased military spending and is part of Japan’s ongoing remilitarization, as Tokyo, alongside the United States, prepares to wage war against China and expand its involvement in the war against Russia.

Japanese Prime Minister Shigeru Ishiba, bottom centre, accompanied by his new cabinet members in Tokyo, November 11, 2024 [AP Photo/Yoshikazu Tsuno]

Ishiba’s cabinet approved the 8.7 trillion-yen ($US55.3 billion) budget on December 27 which requires parliamentary approval by March. It is a 9.43 percent increase over last year’s budget. It does not include additional spending on public works or research and development for military purposes that could raise actual military spending by more one trillion yen as was the case in 2024. The 2025 military budget is part of a larger 115 trillion-yen ($US731 billion) national spending bill.

This year is the third in the five-year military build-up plan, totaling 43 trillion-yen ($US273 billion), unveiled in December 2022 as part of Japan’s revised National Security Strategy as well as its National Defense Strategy and Defense Buildup Program. Tokyo is doubling military spending to approximately two percent of GDP, in line with the target set by NATO. It would make Japan the third largest military spender in the world after the United States and China respectively.

Ishiba, a far-right war hawk and former defense minister, became prime minister in October. Like his predecessors Fumio Kishida and Yoshihide Suga, he is continuing the remilitarization agenda that sharply accelerated under Shinzo Abe throughout the 2010s. Tokyo has all but thrown out Article 9 of the constitution, which bans Japan from acquiring military weaponry and waging war overseas.

The Japanese government has never fully adhered to Article 9, chipping away at it almost as soon as the constitution went into effect in 1947. However, the ruling class paid lip service to it, conscious of the widespread anti-war sentiment in the working class and among youth. Now, however, Tokyo is openly acquiring offensive weaponry that would be capable of striking targets in China, Russia, or North Korea.

This includes 940 billion yen ($US5.9 billion) for developing long-range missiles, a satellite constellation, and the deployment of Tomahawk cruise missiles. Tokyo inked a deal to purchase 400 Tomahawks from the United States last January. An additional 1.8 billion yen ($US11.4 million) will be spent on equipment to launch Tomahawk missiles from Japan’s Aegis naval destroyers.

Another 533 billion yen ($US3.4 billion) will be spent on missile inceptors and mobile reconnaissance radars in Okinawa, which hosts approximately half of the 54,000 US troops stationed in Japan. The purpose is to prepare the region for a US-instigated war with China over Taiwan, a conflict in which Tokyo plans to take an active role.

The Ryukyu (or Nansei) Islands, which make up Okinawa Prefecture, have been increasingly militarized over the last several years with the deployment of missile batteries and military units. From these islands, Japan would funnel weapons into Taiwan as the US bogs China down in a war similar to the strategy employed against Russia in Ukraine. However, a war would undoubtedly expand to the Chinese mainland and throughout the Indo-Pacific as the US and Japan attempt to carve up China in pursuit of their imperialist interests.

Part of the budget also includes a focus on artificial intelligence (AI) and unmanned weaponry. Tokyo plans to build three 4,800-ton multi-purpose compact destroyers, known as the New FFM (or Future Multi-Mission Frigate), totaling 314.8 billion yen ($US2 billion). The ships require only 90 crew members through the use of AI and automated systems, or less than half that needed on older vessels. These ships are upgraded versions of the Mogami-class destroyer which carry long-range missiles as well as having stealth, anti-submarine, and mine warfare capabilities. The Defense Ministry plans to acquire 12 in total.

Mitsubishi Heavy Industries, which produces the warship, is competing with German company Thyssenkrupp Marine Systems to be selected by Australia to provide the upgraded Mogami to the Australian navy. In this regard, Tokyo is working to expand its participation as part of the anti-China AUKUS alliance that includes Australia, the United Kingdom and the US. While not a full member, Japan is cooperating under AUKUS Tier 2, which involves sharing advanced military technology.

This is just one aspect of the military cooperation between Tokyo and Canberra as part of the war preparations against China. In 2023, the two sides agreed to implement a Reciprocal Access Agreement that allows troops from one country to more easily enter the other. Japan is deploying fighter jets and marines to northern Australia on a rotational basis.

The burden for this record-high military spending falls on the Japanese working class and poor as economic conditions decline. In October, the International Monetary Fund estimated that the economy grew by just 0.3 percent for 2024 and will grow by only 1.1 percent this year. Real wages have fallen nearly every month for the past two and half years, including a 0.4 percent drop in October.

To pay for its militarist agenda, the government plans to impose a 4 percent surtax on corporate taxes, an increase big business will have no trouble avoiding through tax loopholes. The government will also increase taxes on heated tobacco products and cigarettes. The government intends to raise income taxes by at least 1 percent, but a final agreement has not been reached given the broad public opposition.

Speaking on this opposition, a former US-Japan alliance manager told the Japan Times, “At a time when the economy was an important factor in the Liberal Democratic Party’s trouncing in the most recent election, it will be difficult for Ishiba to justify why Japan needs to pour money into, say, an arsenal of Tomahawk cruise missiles or a next-generation fighter jet.”

There is also broad opposition to war itself. The focus on AI in the budget is to address the fact that Japan’s military, formally known as the Self-Defense Forces (SDF), has struggled to recruit new troops. In 2023, the SDF barely reached half of its recruitment goal, bringing in 9,959 new troops across the Ground SDF, Maritime SDF, and Air SDF. The Defense Ministry had set a goal of 19,598. This trend is not new, but has been ongoing for years.

The Japanese ruling class blames this on the country’s declining population and low birthrate, which has steadily fallen since the 1970s. This is in no small part due to declining economic conditions that make getting married, having children, and raising families increasingly difficult. However, workers also have no interest in sending their children off to war.

UK Labour government refuses to pay pension compensation to millions of women

Margot Miller

Sir Keir Starmer’s Labour government has reneged on promises made in opposition that the party would compensate women born in the 1950s who lost up to tens of thousands of pounds due to pension changes under previous governments.

During Prime Minister’s Questions on December 17 Starmer, backed by Chancellor Rachel Reeves and Secretary of State for Work and Pensions Liz Kendall, refused Parliament a vote on a compensation package for the cohort—known as WASPIs (Women Against State Pension Inequality)—proposed by the Parliamentary and Health Service Ombudsman.

Starmer said, “The taxpayer simply cannot afford the tens of billions of pounds in compensation when the evidence does show that 90 percent of those impacted did know about it [changes to pensions]. That is because of the state of our economy.”

While Kendall admitted to parliament there was a 28-month delay informing women of the pension changes, in the same breath she said there was “considerable awareness” of the changes, that timely letters would have made no difference and there was no evidence of “direct financial loss.”

Labour politicians including Starmer, his Deputy Angela Rayner, Reeves and Kendall, and many other Labour MPs, all professed sympathy for the plight of the WASPI campaign group in the past. This included photo ops with WASPI women at every opportunity for years.

However, with Labour having an almost unassailable lead over the Tories in the year leading up to the July 2024 general election, the matter was getting too close for comfort for the party—pledged to “iron” fiscal discipline—and nothing on the WASPI issue appeared in its 2024 election manifesto.

The 1995 Pensions Act brought in by the Conservatives, led then by Prime Minister John Major, increased the state pension eligibility age (known as the state pension age), for women from 60 to 65 years, on the cynical grounds of achieving equality with men who retired at 65. The change was phased in from 2010 for women born between 1950-55.

These changes were accelerated by the 2011 Pensions Act under another Tory Prime Minister, David Cameron, encompassing women born between 1950-1960. The state pension age for women increased to 65 by November 2018, and for women and men to 66 by October 2020. The WASPIs argue they were not given adequate notice of the changes by the DWP to enable them to adjust their future financial arrangements accordingly. Many retired without realising their state pension age had risen.

It was only from 2009 to 2013 that the DWP wrote to the women affected about the pension changes in 1995 and 2011.

How this worked out in practise is exemplified by the experience of retiree Hilary Simpson, whose story is told by the Guardian.

She retired early from employment in local government aged 55 to take on childcare responsibilities for her daughter, having calculated she could manage on the lump sum from her workplace pension until she could claim her state pension at 60. The new legislation, however, upended her plans, meaning the lump sum would now have to be stretched over eight years until she was 63. When the changes were accelerated with the 2011 Act, eight years became 10-and-a-half years.

Simpson challenged the claims by the government that 90 percent of the women affected knew about the changes. “The DWP have said they don’t know how many letters they sent out and to whom,” she said.

Further attacks on the pensions of men and women followed. The Pensions Act 2014 further raised the state pension age from 66 to 67, to be in place by 2026-28. An earlier Pensions Act 2007 established a rise in the State Pension Age from 67 to 68 by 2044-2048. The Pensions Act 2014, however, introduced five-yearly reviews and it is expected the state pension age of 68 will be in place much sooner.

A petition organised by the WASPIs has passed the necessary threshold of 100,000 votes for a parliamentary debate to be considered—to discuss a compensation scheme for the WASPI women. To date, approaching 151,000 votes from the public have been registered.

Women Against State Pension Inequality (WASPI). demonstration outside Parliament on the day of Labour's autumn budget, October 30, 2024 [Photo: Cllr Pat Draper/X]

The package proposed by the Ombudsman amounts to £10.5 billion for the 3.5 million women affected, which works out at a meagre payment of £1,000-2,500 for each woman.

This should be measured against the state pension totals which might have been paid but were stolen from WASPI women by the changes in legislation. For example, a woman born in 1952, who paid in the qualifying 30 years National Insurance contributions and retired at the State Pension Age of 62, would have lost two years Full State Pension—at the then weekly amount of £169.50—and robbed of £17,628 in total.

Someone whose State Pension Age rose to 65 would have been purloined of five years’ pension, or a staggering £44,070, as well as five years of well-earned retirement.

How paltry this settlement is exposed in the fact that in the run-up to the 2019 general election, Labour, then headed by the nominally left Jeremy Corbyn, pledged £58 billion—over five year—to compensate the WASPI women. The then Shadow Chancellor John McDonnell said Labour in government would make individual payments of an average of £15,380 to the 3.7 million women affected, with some payouts reaching £31,300. Had Corbyn won the election, there is no doubt he would have ditched this pledge—in line with his constant capitulations to the Labour right that saw him politely hand the party leadership over to Starmer, after losing the general election.

Notwithstanding the laughable pittance that the Ombudsman suggested, ignoring its recommendations is highly unusual and created further embarrassment for the government. The Ombudsman is appointed by the Crown at the prime minister’s recommendation to investigate complaints against public bodies. It is independent of the government and answers complaints to Parliament.

In the UK, the income of pensioners comes from one or more of the following sources: the state pension financed by National Insurance contributions, a workplace pension, a personal pension—or personal wealth. The poorest who survive on the state pension alone must claim welfare benefits to top up their income.

Not only is the state pension being eroded, but so are workplace pensions, with workers in the public who previously received better terms than the average in the private sector being levelled down, now having to work longer and pay higher contributions to receive smaller pensions.

This is above all due to the betrayals of the trade union bureaucracy in the public sector, which sold out the mass pension struggles by teachers, civil servants and workers in higher and further education among other sectors. The largest pension strike on November 30, 2011, involved 2.5 million workers in 20 unions.

This continued into the present decade. Central to the betrayal in 2023 by the University and College Union of its members during a strike wave over falling living standards that erupted in 2022-23 was a sellout pension deal.

Starmer’s refusal to pay compensation to the WASPI women is another signal to the ruling class—after its October budget was attacked by big business—that Labour will deepen its assault on the working class, no holds barred. It follows the sharp restriction of winter fuel allowance payments—previously worth between £100 and £300 for all retirees, including 1.8 million of the poorest—and comes alongside an announcement kicking any action on the social care crisis into the long grass.

A recent study of the sector painted a “dire” picture of provision, the lack of which had a “profound human cost and economic consequences” for the elderly and their families. Thanks to Labour, a “review” will report at the scheduled end of Labour’s first term in office, in 2028.