Puerto Rican firefighters at the scene of the Jet Set Club roof collapse, April 9 [Photo: Department of Public Safety of Puerto Rico]
The catastrophic collapse of the Jet Set nightclub roof in Santo Domingo, Dominican Republic, in the early hours of Tuesday has shocked people around the world.
The roof of one of the most iconic venues in the Dominican capital suddenly caved in as attendees enjoyed a concert by popular merengue artist Rubby Pérez. With rescuers still searching for bodies, 221 people have been found dead, while about 200 others were injured.
Jet Set nightclub, renowned for its “Monday Merengue Nights,” was packed with over 1,000 attendees when disaster struck, while some reports indicate that it had reached full capacity of over 2,000. Most of the victims were workers or middle-class attendees who paid about $30 to experience the atmosphere at the top club.
Pérez, 69, was found dead in the rubble. A beloved artist in the Dominican Republic and internationally, Pérez was among the most recognizable voices in merengue music with hits like “Tu vas a volar,” “Volveré,” and “Enamorado de Ella.” Videos showing his hypnotic stage presence and merry vibe just minutes before the disaster have gone viral, filling fans with grief.
Other prominent figures among the deceased include former MLB players Octavio Dotel and Tony Blanco, and Monte Cristi provincial governor Nelsy Cruz.
Relatives have flocked to the site, hospitals, and forensic institutes in search of missing loved ones. Shailyn Peña, the BBC reports, spent her 17th birthday waiting outside the rubble for news of her father and other family members who were trapped inside. Like many others, she expressed frustration at the lack of updates.
Crowds, with many holding pictures of relatives with the word MISSING, also gathered at the National Institute of Forensic Pathology to hear officials read aloud names of identified victims. Screams of anguish broke out as names of loved-ones were announced. Others moved from hospital to hospital in desperation. For families still awaiting answers, each passing hour compounds their grief.
Doctors warn that some hospitalized victims remain in critical condition having endured hours trapped with multiple injuries.
Rescue teams from Israel, Mexico, and Puerto Rico joined local crews to search for survivors using thermal cameras and sonar technology. Over 189 individuals have been rescued so far. As hopes were fading since no survivors have been found since Tuesday afternoon, The Guardian reported that responders have stopped searching for survivors.
Emergency Operations Director Juan Manuel Méndez assured families that efforts would continue until every person is accounted for. However, with much of the site already searched, authorities are transitioning to recovery operations focused on locating bodies.
The cause of the collapse remains under investigation. Eyewitnesses reported dust falling moments before large chunks of concrete came crashing down on concertgoers. The building’s history raises questions about oversight: originally a cinema from the 1970s, Jet Set underwent renovations in 2010 and 2015, but had not adhered to modern safety standards.
This highlights systemic failures in enforcing building codes, which have themselves failed to keep up with advancements in science and engineering. While Jet Set catered to a relatively more affluent crowd, its structural vulnerabilities reflect a broader neglect that is even more pronounced for the working class.
President Luis Abinader expressed condolences for the victims at the site and attended the funeral of Pérez, but criticisms have been raised that the government is covering up a record of negligence and ignored warnings.
The owner of a neighboring building, Karina Suero Moquete, told the media that she had filed one of several lawsuits against the building over sound pollution and nonstop vibration all night long. Prosecutors responded to them that, “It is part of the national brand.”
The prominence of the locale and the oligarchic character of the Espaillat family that owns it, has raised widespread suspicions of an official coverup. Dozens have commented on a statement on social media published by Antonio Espaillat calling for his arrest.
Only a day before disaster struck, Abinader announced 15 measures modeled after Trump’s fascist agenda and openly advertised as “painful” to crack down on Haitian immigrants. These include raising the number of troops at the border with Haiti to 11,000, building a border wall, new restrictions on migrants’ access to healthcare and public education, and several actions to drive out Haitians from the labor market.
That day, the administration boasted of a historic record of deportations, reaching 187,983 in six months. The announcements, made in the framework of “national security,” have set the stage for media outlets to scapegoat Haitian immigrants to divert attention from the Jet Set club disaster and systemic issues like infrastructure safety. Some tabloids have already begun denouncing the use of Haitian construction workers.
Disasters like the Jet Set Club collapse or the 2017 Grenfell Tower inferno in London, England expose how profit-driven neglect make preventable mass death and suffering inevitable. While in Grenfell’s case, cost-cutting measures led to unsafe cladding; inadequate oversight at Jet Set allowed structural vulnerabilities to persist unnoticed.
As Dominicans are left grappling with grief and anger, some media commentators are calling for stricter enforcement of building codes and greater transparency in government actions.
Such events, however, underscore that disasters are rarely isolated incidents—they are symptoms of systemic failures prioritizing profit over human lives in capitalist society. As in the case of the Grenfell fire and the construction firm and companies responsible, families and the working class hoped to settle accounts and make changes to prevent future catastrophes. The Dominican ruling class is already conceiving a whitewash as it exploits the disaster to promote nationalist chauvinism and anti-Haitian xenophobia.
The fall on Wall Street resumed yesterday after the White House clarified that the tariff on China was 145 percent, not 125 percent as previously indicated, and the vast implications of a full-scale economic war between the world’s number one and number two economies started to sink in.
The 125 percent impost was made up of a so-called “reciprocal tariff” plus measures in response to China’s retaliation. It came on top of the 20 percent tariff hike announced before Trump’s so-called “liberation day” of April 2.
An aerial view of a section of the sprawling Yiwu International Trade Market in Yiwu, eastern China's Zhejiang province, Thursday, April 10, 2025. [AP Photo/Ng Han Guan]
After the euphoria of Wednesday, when stock prices soared on the back of the announcement that there would be a 90-day pause on the imposition of “reciprocal tariffs” on a host of countries, reaching as high as almost 50 percent in some cases, the market came back down to earth with a jolt.
The S&P 500 dropped 3.5 percent after a 9.5 percent surge the previous day. The tech-heavy NASDAQ index fell 4.3 percent, following its best day since 2001, and the Dow was down by 2.5 percent.
In currency markets an index of the US dollar against a basket of a dozen of its peers fell 1.9 percent amid growing questions about what the economic war means for its status as the global reserve currency.
The events of the past week have made ever clearer that the focus of the economic war is directed against China and the thrust of any “negotiations” with other countries will be to demand they align themselves with US “national security” objectives or face major tariff hikes once the 90-day pause expires.
Jim Cramer, one of the panelists on the morning show of the business channel CNBC, commented that references to “tariff hikes” against China should be shelved because what was being imposed was an embargo—that is, a total blockade of Chinese goods.
Economists at Deutsche Bank have referred to a “disorderly decoupling between the world’s largest economies.”
Others have put it more strongly. Capital Economics said Chinese exports to the US could more than halve in the coming period. Analysts at Societe Generale said China’s exports to the US “will be largely wiped out” due to the tariff increases.
The effects are already being seen. According to a report in the Wall Street Journal, daily container bookings in the US-China trade route have fallen by a quarter since the end of March compared to a year ago. It said some US importers had temporarily halted inbound shipments while others were storing them at warehouses to await clarification before paying the tariffs.
There are a growing number of reports, even before the full effects of the tariffs hit home, of the economic damage they have already caused in both China and the US.
The chief executive of a US company, which makes kitchen ware and home products sourced in China, India and Cambodia for sale by Walmart, Target and others in the US, told the Journal he had already lost $10 million in cancelled orders and expected more to come.
The chaos that has been unleashed was highlighted in a Financial Times (FT) article that reported on shipping companies cancelling orders and warning of growing disruption in coming weeks.
An unnamed source in the Shanghai freight industry told the FT: “We are seeing now a tremendous amount of cancellations. There’s just so much uncertainty that people are pulling containers. At the moment we have a new order of about 100 containers that’s supposed to go into Houston, and all that’s on hold. The situation changes almost hourly.”
While Trump, his cabinet members and acolytes more broadly are claiming that Wednesday’s “pause” was all part of some master plan to bring US trading partners to plea for negotiations, the real reason was that the financial system was on the edge of a breakdown as serious as that of 2008 and March 2020, or even greater.
In an editorial yesterday, pouring cold water on the claim that “Trump’s retreat was all part of a ‘grand negotiating strategy,’” the FT said that the “key factor was surely the precipitous slide in the markets—above all the mighty US government bond market.”
In his announcement of the “pause,” Trump did say people had become a “little queasy.”
But as the editorial commented, this was a “lesson in understatement.”
“The US government bond market avoided disaster, but it came close. A reliable rule of investment is that when crisis strikes, Treasuries act as a safety valve by offering a risk-free retreat, so prices rise. After Trump’s tariffs this function failed, and bonds fell.”
The editorial also turned to the issue of the status of the dollar as the world’s reserve currency. It noted that, with the US having compromised its safe haven status, two of the most reliable buyers of US government debt, Japan and China, may start to sell Treasuries or “tap the brake on further purchases.” In fact, China has already been running down its holdings of US debt for some time.
Trump’s economic war has placed front and centre the issue of the very functioning of the international monetary system. Since August 15, 1971, and President Nixon’s withdrawal of the gold backing from the dollar, it has been a fiat currency. That is, it has no foundation on real value but has depended on the power of the American state.
But that state is now in an economic and financial crisis—the explosion of government debt to $36 trillion and rising at what is universally considered to be an “unsustainable” rate being only one indication.
This underlying crisis has now been brought to a new peak of intensity by Trump’s actions. His thrashings, this way and that, are an expression of the existential crisis of the capitalist system itself, while at the same time exacerbating it.
As the editorial noted: “Trump’s blunderbuss efforts to reset global trade rattled all the pillars of a reserve currency: stability, reliability, robust policymaking and the rule of law.”
And bond markets responded with a clear warning that the dollar’s reserve status is not an immutable given.
The growing lack of confidence in the dollar is expressed in the rise of the gold price. After a brief downturn in the market sell off, its surge has resumed and is almost daily reaching record highs having risen 7.5 percent in the past 48 hours.
These processes, racing out of the control of the ruling classes and its agencies to contain them, threaten to wipe out vast structures of wealth based on the dollar and massive credit mountains. The breakdown of the capitalist system is not a prospect for the future, it is already underway and there is no solution within its framework.
The Trump administration’s decision to gut the US Agency for International Development (USAID) and axe foreign aid has sent the anti-government opposition in the south Caucasus country of Georgia into crisis. American funding has long played a central role in sustaining the large network of non-profit and civil society organizations seeking to drive out the current ruling authorities for failing to adopt a decisively anti-Russian line.
For months, forces opposed to the ruling Georgian Dream (GD) party have been protesting in the country’s capital city, Tbilisi. Their central demand has been the nullification of last October’s parliamentary elections, which delivered a majority to GD. Insisting that the vote was rigged, a claim for which no proof has been provided, they demand that the parliamentary vote be re-run so as to get the outcome they wish. These demonstrations followed on the heels of last spring’s anti-government protests, which centered around the GD government’s passage of a “foreign agents law.”
In the various waves of demonstrations, virulently anti-Russian, pro-EU, pro-US and pro-Ukrainian slogans have predominated. Crude banners directed against Putin have come alongside calls for “democracy,” “human rights” and the “European way”—the stock in trade of right-wing forces hoping to ingratiate themselves with the imperialist powers and vacuum up a few bits, however measly, from what falls off the table of the big players in the capitalist system.
The EU’s and Washington’s full backing for Israel’s war of extermination against the Palestinians has not caused Georgia’s opposition to skip a beat. And social and economic issues that impact the vast majority of the population have never found a place in this allegedly popular movement. In recent weeks, hundreds of Georgian miners have been staging protests in the capital against layoffs and unpaid wages. They have not, however, rallied behind the anti-government opposition.
The Trump administration’s attack on the post-war order is unmooring the pro-US and pro-EU layers in Georgia and across the post-Soviet sphere. Regardless of whether or not the White House successfully cuts a deal with the Putin government over the Ukraine war, Trump’s willingness to abandon Kiev and pursue such an agreement over the opposition of the EU powers signals the torching of the US’ longstanding alliance with Europe and the foreign policy that had long-cemented these ties—a ferociously anti-Russian line covered over with hollow babble about “defending freedom.”
For decades, the US has been meddling in Georgia and all the former Soviet countries with the express purpose of bringing to power governments that are avowedly hostile to Moscow. An entire social layer has been cultivated on this basis, and it is now at sea.
The axing of American imperialism’s soft power money through the shutting down of USAID has “left many of Georgia’s civil society actors reeling,” notes a March 10 article on the website Civil.ge, a pro-opposition news outlet. “Most programs that supported civil society engagement with governance are now shuttered,” it adds, resulting in the loss of about 2,000 jobs.
In an admission of the close relationship between Western funding and those on Georgia’s streets demanding that the government give up power, the author laments that “the fines they get almost daily from the police for closing traffic will feel much more painful to them.”
The volumes of money in question are not small, particularly for a country with a population of just 3.7 million and an annual GDP only slightly over $30 billion. According to a March 8 article on the website GEOPolitics titled, “As USAID Dies, Many of Georgia’s ‘Vibrant’ CSOs Face Extinction,” the size of US expenditures relative to the number of people in the country is so large that Georgia “has been one of the largest per capita recipients of US Assistance.” Between 2012 and 2023 American overseas development money spent on the tiny south Caucasus nation amounted to $1.92 billion.
USAID, next to the US State Department, is the primary administrator of these monies, according to the official website ForeignAssistance.gov. Not a single dime is spent on poverty or human welfare.
Of all the money delivered in 2023—$149,075,515—just two grants totaling $22,161 are identified as having to do with “Health,” and the explicit purpose of one of them is listed as “redacted.” A few hundred thousand dollars are dedicated to supporting things like English classes, teacher training and environmental protection. There was, however, $4500 allotted to something having to do with the racialist, gender-obsessed post modernist sociologist bell hooks (who for some reason also rejects basic English grammar and does not capitalize the first letter of either of her names). One program having to do with to “gender-based violence” had a balance of -$50.
The top recipient of US State Department money is the “Foreign Military Financing Program,” which got $35,000, followed by USAID’s “Promoting Rule of Law in Georgia.” It received $8,990,900. What then comes is a laundry list of imperialist “soft power” operations dressed up with words like “self governance,” “information integrity” and “civic education.” For instance, the USAID Civic Education Program, which received $2,700,000 in 2023, is described as follows: “The purpose of the USAID Civic Education Program is to use civic education to prepare the next generation of Georgians to be civically engaged and know and exercise their democratic rights and responsibilities.” Translated into plain speak, this means funding anti-government movement.
The Georgian website GEOPolitics, which is run by the Gnomon Wise Research Institute (another outfit funded by US and European sources), explains that even when US money has been allotted to initiatives to be undertaken by the Georgian government itself, the non-governmental “civil society” community is at the center of these efforts. Washington uses employees from USAID-sponsored Georgian NGOs to implement the policies dictated to the Georgian government.
The halt of the flood of foreign aid money has left the country’s opposition demoralized. “After a hundred days of nonstop street protest, the winter of Georgian discontent fails to bear fruit,” observed Jaba Devdariani on the news outlet Civil.ge early last month. According to him, activists are walking away from the protests and even, it seems, leaving Georgia, a fact that reveals something about the socio-economic position of layers within the core of the anti-government opposition, as the vast majority of people do not have the money to decamp from their native land because they are politically depressed.
The ruling Georgian Dream party has praised the cuts to USAID and Trump’s attacks on the “deep state.” It is moving forward with attempts to tighten the political screws and further consolidate power by passing legislation banning opposition parties, placing further limits on the media, increasing fines and detention times for protesters and introducing treason into the country’s criminal code.
The government has also revised its “foreign agents law” to make it identical to the US’ 1938 Foreign Agents Registration Act. The closeness of the two laws has created something of a problem for the opposition because it reveals the fact that the anti-democratic measures of the Georgian government are entirely in keeping with the policies of the American state. They have dealt with the issue by claiming that Georgia’s version is much worse than the US’.
Politically, the central issue is that Trump’s policies, domestic and foreign, have caused the mask to fall off. The “American way”—the peace, prosperity, and human rights promised to the former Soviet masses after the Stalinist bureaucrats dissolved the USSR and restored capitalism—has come to naught.
It is, and will become ever-more, difficult to appeal to popular frustrations over the Georgian government’s policies on the basis of the claim that there is some sort of global, democratic spirit floating in the ether, calling out for the Georgian people. The world’s oldest democracy is crushing dissent, kidnapping and detaining critics and deporting immigrants guilty of no crime to El Salvador’s most brutal prison. All of this is rubber-stamped by the Supreme Court and unopposed by the Democrats.
Despite the blow that it has experienced, Georgia’s opposition is not done seeking the support of their American benefactor. The country’s leading oppositionist, former Georgian president and top French diplomat Salome Zurabishvili, was invited to attend Donald Trump’s inauguration in January. On the sidelines of the event, she met with now Defense Secretary Pete Hegseth and Secretary of State Marco Rubio.
Zurabishvili was overcome with praise for the would-be dictator in the White House at an event sponsored by the Atlantic Council on January 21, the same day that Trump was issuing decrees gutting civil rights and preparing the mass firing of federal workers.
“I think that the America that he [Donald Trump] is describing, and the foreign policy of America that he is describing as of a strong America… America that is effective and active in action—that is the America that Georgia certainly needs,” Zurabishvili said.
In Washington, the US Senate Foreign Relations Committee, just approved the MEGOBARI Act with bipartisan support. The bill asserts American support for “democracy” in Georgia and targets the current government in Tbilisi.
Speaking on March 10 to Civil.ge, Tamara Chergoleishvili of the newly-formed Federalists, a “staunchly pro-US party” according to Civil.ge, berated oppositionists for “panicking” and counseled patience in the search for a new arrangement with the White House.
Politically, there is nothing holding back the Georgian opposition from allying itself with Donald Trump. Their commitment to democratic principles runs none too deep. Writing on March 24 in Civil.ge, Nina Gabritchidze opined that it was time for the opposition to give up its demand for the re-running of the last parliamentary elections, as it should not be under any obligation to recognize the result should it go against them.
“So, does the call for a new election imply that a vote—fair or not—can legitimize oppression? Should it be decided by a simple majority whether one still deserves to be treated as a human being? Should you quietly accept it if 51% of the voters decide—willingly or under pressure—to sacrifice your entire existence for a vague populist agenda?”
In short, based on the a priori assertion that voters’ will cannot find reflection in the balloting, there is no need for elections at all.
The immediate fate of the south Caucasus country, and the region as whole, in the present, rapidly shifting geopolitical situation remains to be seen. Will the Georgian opposition be completely cast aside by the White House as part of its scheming? Will the European powers pick up those who have been tossed overboard? Will Washington, having disciplined its Georgian subordinates, pivot and place them once again on the dole? Or will it simply mow them down in the drive to war against China and everyone else?
For all the talk on both sides of the political equation in Georgia about securing the country’s “freedom,” “interests” and “independence,” no such thing is possible in the world imperialist order, much less under the present circumstances. The dissolution of the USSR, of which Georgia was a part, by the Stalinists in 1991 opened up this country and the entire post-Soviet sphere to the predations of the leading capitalist powers. Georgia has been preyed upon ever since, an endless objection of machinations and scheming by the US and Europe.
Russian President Vladimir Putin, left, chairs a Security Council meeting in the Kremlin in Moscow, Russia, Monday, Feb. 21, 2022. (Sputnik, Kremlin Pool Photo via AP) [AP Photo]
After three years of war, the Putin regime is increasingly unable to control its explosive social consequences, which have exacerbated the internal contradictions of Russian capitalism.
In an effort to overcome the social and economic consequences, Putin hopes to make a deal with US president Donald Trump, but he is unable to make it without certain guarantees that would allow him to reduce opposition from ultra-nationalist forces and discontent from the Russian working class.
While Trump is interested in a deal that will allow the US to exploit the raw material resources of Ukraine and Russia at the expense of its imperialist rivals in Europe, he is increasingly dissatisfied with Putin’s dragging out the negotiations. Now, these tensions are exacerbated by a global trade war.
A peace treaty, even if it is reached, no matter how much verbal guarantees and ostensible actions accompany it, will only be a temporary truce. Unless the working class intervenes independently, it will inevitably lead to a new war, even larger and more barbaric than the one that has been going on for the past three years. Moreover, the global trade war unleashed by Trump’s tariffs further deepens the political and economic instability of all capitalist governments and intensifies the global drive to war.
In order to understand the class dynamics and the way forward for the working class in this volatile situation, it is important to review the current state of the economy and social relations in Russia.
What is behind Russia’s economic growth?
The last two years of war have brought industrial production growth in Russia that exceeded the “peaceful growth rate” before the pandemic. Many defenders of the Putin regime use this fact to justify his reactionary policies.
On February 7, Prime Minister Mikhail Mishustin reported to Putin that the Russian economy grew by 4.1 percent in 2024. This growth was attributed to a 4.6 percent increase in industrial production, with the manufacturing sector growing by 8.5 percent for the year. In 2023, industrial growth rose by 4.3 percent. Two years of industrial growth above 4 percent followed a modest 0.7 percent growth in 2022, with Russia’s GDP contracting by 1.4 percent in the same year. By comparison, in the post-2008 crisis and pre-pandemic period, industrial production grew at an average annual rate of 3.2 percent.
However, the recent growth has been based primarily on the growth of military spending and military production and its surrounding industries. That is, the industrial growth of the Russian economy is based on the production of means of war and destruction. In fact, in the non-military sectors of the economy there is a general stagnation or even decline—as in the coal industry or the unprofitable activities of Gazprom (whose net loss amounted to 1 trillion rubles for 2024).
The Center for Macroeconomic Analysis and Short-Term Forecasting (founded by current Defense Minister Andrei Belousov) emphasizes that the main growth factor in 2023-2024 has been the military industry and the growth of consumer spending. Moreover, together with the decline and stagnation of Russian exports, the domestic market remained the only serious driver of the Russian economy.
Economic growth based on military production and growth of consumer spending cannot last long. The dependence of economic growth on these two factors creates huge imbalances in various sectors of the Russian economy, putting enormous pressure on the profit margin of the oligarchy. Therein lies one reason for the desire of sections of the Russian oligarchy to end the war in Ukraine with a deal that would ease the pressure of sanctions on Russian capital.
Current estimates of the Russian economy already recognize a future economic slowdown in growth rates, with analysts surveyed by the Bank of Russia suggesting a growth rate of 1.6 percent for 2025, which would be below the global average growth rate. Thus, economic growth through war is already coming to an end and the ruling regime faces new challenges.
The contradictory nature of wage growth
One of the most striking phenomena of this war economy has been a record increase in average wages in Russia. In the last year alone, average wages have risen by 9 percent in real terms. It would be naive to believe that the wage growth is due to the desire of Russian business or Putin’s regime to improve the lives of the working class.
The two main reasons for this wage growth are the outbreak of war in Ukraine and labor shortages in a number of sectors of the Russian economy. The war in Ukraine has enormously inflated federal budget spending from 24.8 trillion rubles in 2021 ($295 billion) to 40.2 trillion rubles ($497 billion) in 2024. The main expenditures went to increase the army and military production (RUB 13.1 trillion or $156 billion for the year). At the same time, revenues did not keep pace with expenditures, resulting in a large budget deficit for all three years of the war: 3.3 trillion rubles in 2022 ($39.2 billion), 3.2 trillion rubles ($38 billion) in 2023 and 3.5 trillion rubles ($42 billion) in 2024.
To cover the deficit, the Russian state has resorted to increasing domestic debt and reducing liquidity in the National Welfare Fund (NWF) by $64 billion. The NWF is the main reserve for Putin’s regime in case of serious crises. If spending remains at the same level, the liquid part of the NWF will be exhausted within a year.
Thus, wage growth has primarily occurred among the security forces and the manufacturing industry engaged in military production. This emerges clearly from the uneven character of wage growth in the different regions of Russia.
The leading regions in the manufacturing industry are all directly linked to military industry: Moscow, Tambov, Kaluga, Ryazan and Tula oblasts; St. Petersburg, Udmurtia and Ulyanovsk oblasts; Kurgan and Sverdlovsk oblasts. According to Novye Izvestiia, the most impressive growth took place in the Kurgan Region, which is very dependent on the military industry: industrial production grew by 24.9 percent, growth in manufacturing industries amounted to 32.5 percent and production of finished metal products soared by 203 percent.
The increase in the wages of certain categories of workers and in regions associated with the war intensifies the disproportions within Russian capitalism. The uneven development of the regions is intensified by the general stagnation of civilian production.
Only in eleven regions of Russia has the average salary exceeded 100 thousand rubles (about $1,190). Twenty-six regions did not even reach the national average (about 60 thousand rubles or $714). At best, 44 million people employed in the military industry, in the heavy industry close to it, in logistics and in construction experienced such wage growth. The remaining 28 million people employed in other industries (primarily in medicine and education) have actually become poorer due to rapid inflation. Thus, general social inequality has grown. The top ten percent of income earners now control over 31 percent of the total cash income of the country’s population. By contrast, the bottom 10 percent own just 1.9 percent of all income and live on less than $170 a month.
In this sense, the words of Sergei Smirnov, Doctor of Economics, are illustrative:
When the growth of wages in certain industries is 24 percent and the country’s GDP grows by 2 to 3.5 percent, this is impossible. Or rather, it can happen temporarily, but it cannot be sustained for a long time. Otherwise, all the proportions are broken. As a result, all these wages get into the consumer market and worsen the quality of life of low-income groups, because those who receive 24 percent more go not only for a car, not only for household appliances, but also go to the food market.
As for the second reason for wage growth: A severe labor shortage has been a structural problem of Russian capitalism for a long time, because of the brain drain, the demographic crisis and the destruction of the education system after the dissolution of the Soviet Union. The war in Ukraine has significantly exacerbated this tendency. Part of the male population went to war under contract or was mobilized. Another part switched from civilian to military industries, which led to a labor outflow to better-paid industries. Even under these conditions, however, industry still faced labor shortages.
Over the past five years of war and pandemic, according to Rosstat, Russia’s population has decreased: by 1.43 million in 2021; by 600,000 in 2022; by 495,000 in 2023; by 596,000 in 2024. In total the population of Russia decreased by 3.1 million people. The main reasons for this population decline are: 1) high mortality from the pandemic, which the authorities “forgot” about with the start of the war; 2) the war in Ukraine; 3) mass emigration of citizens afraid of mobilization or repression; 4) increased deportations of foreigners by the Kremlin.
The shortage of personnel in 2023 was estimated by the Institute of Economics of the Russian Academy of Sciences to be about 4.8 million people. It will only increase with the further course of the war, political instability and deterioration of medicine, which further deepen an already severe fertility crisis.
The situation in the Kuznetsk coal basin
One of the most acute manifestations of the dire situation facing significant sections of the working class in Russia is that of the workers at the Inskaya mine in the Kuzbass region in Siberia.
They have been facing non-payment of wages for six months now, with a total debt of about 65 million rubles (about $773,800). It is not the first time that the workers have protested against the management and appealed to the local authorities. They have already held a hunger strike in October and a strike in December 2024. Despite the promised help from the state, however, the miners face complete neglect from the authorities and business. Moreover, taking advantage of their plight, military commissions have offered miners to go to war in Ukraine, promising them huge sums of money.
Based in the Kuznetsk coal basin (Kuzbass) in the village of Belovo, Inskaya is just one of a growing number of mines that do not pay their workers and have come to a halt in coal production. The total debt of such mines amounts to 220 million rubles (about $2.6 million) and is set to increase in the near future.
The current crisis of the mines is directly related to the sanctions imposed by NATO since the war, the fall in global coal prices and their inability to compete on the world market, except for selling coal below cost. The balanced loss of Russian coal producers amounted to 68.7 billion rubles (roughly $818 million) in the first eleven months of 2024, with the share of loss-making enterprises reaching 53 percent. And this is against a profit of 400 billion rubles ($ 4.76 billion) in 2023.
The obvious conclusion drawn by Russian capitalists from this was the complete disregard for the labor of workers, who kept working at the mines, allowing them to function, even when they would not receive wages. While the weakest mines went bankrupt one by one, their owners were able to save good sums of money and thus provide themselves with a safety cushion.
Although the bankruptcy of mines and non-payment of wages to workers is bound up with the global conjuncture of falling coal prices, it is only the most acute manifestation of the systemic crisis in the Russian coal industry, which began with the restoration of capitalism. Coal mining is one of Russia’s important raw material export-oriented industries. It is carried out in more than 20 regions of the country, with the largest scale in the Kuznetsk coal basin, where more than 50 percent of Russia’s coal is extracted.
Throughout Putin’s regime, coal production and exports have grown almost continuously. While in 2001 coal production was 269.3 million tons, in 2021 it was 432 million. In the same period coal exports increased fivefold from 41.7 million to 210.5 million tons. The dependence of the coal industry on export growth became apparent after the outbreak of the war in Ukraine and the coal embargo of Western countries against Russia. The coal industry had to reorient its European exports to Asian markets. However, this has failed. While in 2022-2023 exports managed to remain at the level of 2021, in 2024 coal exports fell to 195 million tons.
Thus, the coal industry faced stagnant export growth in 2021-2023 and a record drop in 2024. The growth crisis of the coal industry has been passed on to the working class. The Russian oligarchy will pursue a program of job cuts, wage cuts and closure of unprofitable mines, which will inevitably cause an increase in unemployment in coal mining regions.
The situation with the Kuzbass miners is only the most vivid manifestation of a general trend. The coal industry in Russia, while important, has long suffered from structural problems associated with the restoration of capitalism. The focus on exports has led to a complete disregard for the environmental impact of coal mining in the regions. Moreover, all profits from coal mining were effectively concentrated in the hands of the owners of coal companies and mines, as well as local and state authorities. As a result, despite the important position of miners in the Russian economy and the high economic growth of the last two years, Kuzbass, the leader in coal production and export, is one of the poorest regions in Siberia in terms of average wages.
Inflation with no end in sight
Another major economic and social issue is inflation. This problem took on a serious character in the first year after the coronavirus pandemic began. At the end of 2021, official inflation in Russia amounted to 8.4 percent, in 2022 it rose to 11.9 percent, in 2023 it was at 7.4 percent and in 2024 at 9.5 percent. Food inflation, which hits the poor the hardest, was even considerably higher.
Initially, inflation was conditioned primarily by the crisis in global supply chains and the impact of Western sanctions on the Russian economy. Then it was exacerbated by overheating from the growth of the war economy.
The authorities claim that the causes of inflation lie in excessive growth of consumer demand, which, in their opinion, inevitably led to overheating of the economy and price growth. The growth of consumer demand is also blamed for the labor shortages and the growth of real wages. The situation on the labor market is such that with a huge shortage of personnel, it becomes easier for Russian workers to fight for higher wages. Unemployment in Russia now officially stands at only 2.4 percent. Under such conditions, it is difficult for capital to directly undercut wage growth.
Thus, the Putin regime’s domestic policy is full of contradictions. To support the war, the Kremlin has been forced to inflate government spending enormously, adopting a policy of budget deficits covered by domestic debt and reserves. This, coupled with increased labor shortages, has led to record wage increases for the working class in the manufacturing sector, as well as rising incomes for the military and their families, while other sections of the working class have been impoverished. Rising wages inevitably put pressure on the rate of profit, causing the capitalists to retaliate by increasing the prices of goods and services, which hit the poorer sections of the working class first, and intensify the exploitation of the working class more broadly.
Behind the statements and policies about a “cooling” down of the economy and stopping inflation lies the Russian oligarchy’s desire to stop wage growth and shift the burden of the crisis onto the working class by triggering a vicious cycle of recession and bankruptcy through high interest rates, thus encouraging capitalists to cut production, increase labor intensity and layoffs.
The policies of Russia’s Central Bank have been aimed at increasing unemployment and reducing wages. The policy of high interest rates (21 percent since November 2024) aimed at reducing 10 percent inflation is the Putin regime’s main measure in shifting the burden of the crisis onto the workers. At the same time, it is an attempt to create an economic framework that would make it possible to continue and expand the war if there is no deal.
With labor shortages and the general economic stagnation of civilian production, this policy threatens a real social catastrophe for the Russian working class. In the long run, this will affect all layers of the working class, regardless of whether they are employed in military or civilian production. Already, the Russian government is preparing amendments to the Labor Law which would double the amount of overtime allowed from 120 to 240 hours. At the same time, overtime pay would only be paid beginning from the 121st hour. The changes would allow employers to effectively add an entire 13th month of work to the average work year.
The origins of the reactionary policies of the Putin regime
In today’s problems, Putin’s regime is facing the product of the disastrous destruction of the Soviet Union and the restoration of capitalism out of which it emerged. All of its policies demonstrate how incapable it is of dealing with these fundamental problems in a progressive way. The bankruptcy of Putin’s regime reflects the general historical bankruptcy of Russian capitalism and the world capitalist system more broadly.
Russian capitalism emerged after the Stalinist dissolution of the Soviet Union as a huge source of cheap raw materials for the imperialist countries. Having plundered Soviet state property and appropriated the nuclear arsenal, the Russian oligarchy staked its fortunes on enriching itself through the export of raw materials and the relatively cheap labor of the Russian working class, while retaining a certain regional influence and “sovereignty.”
In practice, this meant the dismantling of the social achievements of the October revolution in the form of health care and education, as well as the general standard of living of the working class. This was generally accomplished in the 1990s through the “shock therapy” under Boris Yeltsin. However, the new ruling class had to consolidate itself in order to further integrate itself into the world capitalist system as an “equal partner.” This was the historical role of Putin’s regime.
It became the mainstay of the Russian oligarchy’s wealth accumulation and thus the custodian of Russia’s vast social inequalities. When Putin rose to the head of the Russian state in 2000, there was not a single dollar billionaire in Russia. In 2008, the number had reached 87. In 2021, it was already 117. This year, it grew to 146, according to Forbes. Over the past year alone, the oligarchs were able to increase their fortunes by $48.7 billion. They now own a combined capital of 63.3 trillion rubles (about $737.3 billion), more than the total bank deposits of the rest of the country. The role of the Putin regime has been to protect the interests of this oligarchy at the expense of the Russian working class.
The looting of the Soviet legacy led to an even greater technological backwardness of Russian industry, which only increased the need to import technology from more developed countries to maintain social stability and further the functioning of the economy. Fixed assets of production were increasingly worn out. Russian and foreign capital was invested primarily in the extractive sector, which brought instant profits. The problem of long-term technological development was of little concern to the Russian oligarchy, which was satisfied with its position and sought to preserve it.
As a result, Russia has become highly dependent on imports of more advanced technologies from the imperialist countries. Once these were cut off by sanctions, Russia had to turn to more imports from China. However, these have been insufficient to substitute for decades of lack of investment and for the imports from the imperialist countries.
A vivid example of the depreciation of fixed assets is the crisis of cargo transportation in Russia, which was aggravated by the war in Ukraine. Previously, the truck transportation fund was mainly replenished by imports of European vehicles, but with the development of sanctions, the structure of imports changed towards Chinese trucks.
Today, the trucking industry is facing a serious crisis of wear and tear on its fleet. A sharp 89 percent drop in imports earlier this year indicates that Russian companies have become less likely to renew their fleets, with the average age of their vehicles has already reached 23 years. At the same time, according to Arthur Consulting, the shortage of employees in the freight transportation sector is 20 percent and continues to grow rapidly.
Experts surveyed by Forbes before the announcement of Trump’s tariffs predicted a 20-30 percent increase in transportation rates in the near future. This means that further price increases, including for food and essential goods, are almost inevitable, which is another refutation of the oligarchy’s fairy tale of inflation caused by high consumer demand.
There is also the problem of labor shortage. It has long been one of the main manifestations of the demographic crisis in the country, which was a direct result of the restoration of capitalism. Between 1994 and 2024, Russia’s population never went back to its historical peak of 148.5 million people reached in 1993, despite all the Putin regime’s demonstrative policies to improve demography.
With the outbreak of war in Ukraine, the birth rate has fallen to record depth, inevitably creating a new demographic hole that will exacerbate labor shortages in the future. That is why the Russian nationalists dream of a demographic population boom that will solve all problems like a magic pill.
In launching his adventurous invasion of Ukraine, Putin clearly did not expect it to drag on for three years of bloody war, killing over a million people on both sides. The war has exacerbated all geopolitical contradictions. It has accelerated NATO’s military build-up, helped flood Ukraine with weapons and strengthened the position of neo-Nazis in the state apparatus. In addition, the pressure of sanctions on the Russian oligarchy has not abated, but rather continues to intensify.
Certain advantages of the Russian army on the battlefield are just a military conjuncture, based primarily on the internal crisis of the Zelensky regime and the reorientation of U.S. imperialism toward China and the Middle East. Even if a deal is reached, the internal contradictions of both US and Russian capitalism will intensify. For Russia, any deal with US imperialism would involve the opening up of significant portions of its raw materials to direct exploitation by the imperialist powers and an intensification of the oligarchy’s attacks on the working class.
Moreover, any such settlement would be of a temporary character. The aggression of the imperialist powers against Russia and China would not only continue but intensify, including in other regions of the globe. If no deal is reached, the war in Ukraine will continue, which means military spending will remain at the same level or increase. In such a case, the repressive policies of the Putin regime and its pressure on the working class will be intensified. All this will be accompanied by a new barrage of nationalist and religious propaganda and imperial chauvinism.
A week after US President Trump launched his economic war against the world under the banner of so-called “reciprocal tariffs,” China will have a tariff of 104 percent imposed on its goods starting today.
This follows the decision by Trump to hit China with an additional 50 percent tariff, following its imposition of a 34 percent tariff on US goods in response to the US decision to impose tariffs of 54 percent last week.
When previous tariff increases are considered, imposed under the first Trump administration and maintained by President Biden, the tariff level against China is now around 120 percent. Nothing like this has ever been seen before.
The latest measures have brought a defiant response from Beijing.
A spokesperson from the Commerce Ministry said:
If the US proceeds with implementing these escalated tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests.
If the US insists on going its own way, China will fight to the end.
As other countries have sought talks and negotiations, Beijing is digging in for a major battle. The all-out conflict between the number one and number two economies will reverberate around the world, with far-reaching implications for every country, even more than it already has.
The ministry official said the tariff escalation was
a mistake compounded by another mistake and once again exposes the coercive nature of the US side. China will never accept this.
The economic war against China has embroiled the countries of Southeast Asia, which have been hit with some of the highest tariffs, including Malaysia at 24 percent, Vietnam at 46 percent, Cambodia at 49 percent, Indonesia at 32 percent, and Thailand at 37 percent. These tariffs threaten to devastate their economies.
The aim of these measures is not to equalize or balance trade between the US and these countries. Not even officials in the Trump administration, in their most deranged moments, believe that is remotely possible because the countries involved do not have the economic wherewithal to even come close.
The tariff hikes against the region serve two purposes: one economic and the other geopolitical.
In the wake of the initial round of Trump’s tariff hikes against China during his first administration, many companies moved some of their operations aimed at the US market to the region in a strategy dubbed “China Plus One,” in order to avoid the tariffs. That road has now been closed.
The geopolitical objectives are the outcome of an evolving situation over the past decade and a half.
Ever since President Obama launched his anti-China “Pivot to Asia” in 2011, announced from the floor of the Australian parliament, many countries in the region have been seeking to maintain a balancing act between China, to which they are deeply connected economically, and the US.
The Trump tariff war against them is a declaration that the days of such maneuvering are over. They must get off the fence and fall in behind the US in its ever-increasing war drive against Beijing, or they will be hit hard.
There may well be negotiations with them over the tariffs. But any talks will involve more than economics because, as the Trump regime has stated, any decrease in tariffs requires that countries “align with the United States in economic and national security matters”—the biggest one of which is China.
As Trump wages war against the world, there is significant blowback hitting both the real economy and the fragile financial system in the US.
So far, the tariff hikes have been a massive hit to both consumers, who purchase a vast range of goods worth billions of dollars sourced in China, and to businesses that depend on imports from China and many other countries all over the world for their production processes.
Almost half of US imports are intermediate goods that are used by US companies to produce the final commodity. In the past, tariffs hit completed imported goods. But those days have gone with the development of globalized production over the past four decades.
The entire cost structure of US businesses, large and small, has been elevated, meaning that in order to counter this effect in the only way possible under the capitalist system, they must introduce cost-cutting programs through layoffs while intensifying the exploitation of those who remain in order to maintain profits. This process has already begun, with tariff-induced layoffs already being undertaken.
The most palpable effect so far of the tariff war has been in financial markets. Wall Street experienced its fourth-largest decline in the post-war period last Thursday and Friday, when trillions of dollars were wiped off market capitalization.
In a wild day of trading on Monday, the market eventually settled with very small losses.
But the sell-off continued yesterday. The S&P 500 index dropped 1.6 percent, while the NASDAQ fell by 2 percent.
The sharp market falls have resulted in a slanging match between two key figures in the Trump entourage: Elon Musk, the billionaire head of DOGE, and Peter Navarro, senior counselor for trade and manufacturing, the chief anti-China hawk.
Yesterday morning, Musk denounced Navarro as a “moron” and “dumber than a sack of bricks,” after Navarro said in a TV interview that Musk was just a “car assembler” and that in his opposition to the new tariff regime, he was “protecting his own interests.”
Musk’s attack expresses opposition in sections of the financial oligarchy who fear that Trump’s measures are going to kill the goose that laid the golden egg. Their vast fortunes have not been made from autarky and the isolation of the US from the global economy, but they have been accumulated by exploiting globalization to their advantage.
And a significant factor in the accumulation of their wealth has been the supremacy of the dollar, which has allowed the US to run up debts to historically unprecedented heights, enabling the accumulation of vast fortunes via parasitism and speculation.
But the economic isolationism championed by Trump, with Navarro playing a leading role, is placing a question mark over the dollar’s global role.
Besides the continuing market sell-off, there was a highly significant new development that indicates that another financial crisis could be in the making.
The initial response to the tariff hikes was a fall in the yield on Treasury bonds, as a result of buying by investors seeking a safe haven, fearing that Trump’s measures would bring a recession. [Bond prices and yield have an inverse relationship in that as demand for them increases, their yield falls.]
But on Monday and again yesterday, the movement went in the other direction. On Monday, the yield on the 10-year Treasury bond jumped by 0.19 percentage points, the biggest one-day rise since September 22. Yesterday, amid what was described as a “weak” auction for the purchase of $58 billion worth of new government debt, the yield rose by a further 0.11 percentage points.
In a market where shifts, up or down, are generally very small, a total rise of 0.3 percent is considered large.
According to the Financial Times:
Tuesday’s sell-off is the latest sign of how some investors are ditching even very low-risk assets as … Trump’s tariffs on major trading partners spark intense volatility in markets.
One of the driving forces at work in the sell-off is the rise in margin calls being made by banks, which fund hedge funds and other market traders. In return for supplying them with credit, they demand that some cash be lodged with them. But as the value of the assets held by the funds rapidly falls, the banks are making a demand, a margin call, for more money to be placed with them.
Last Friday, it was reported that some hedge funds had been hit with the biggest margin calls since the start of the pandemic in 2020. This has prompted a dash for cash, as hedge funds stump up money to the banks in order to maintain their credit lines, upon which they depend.
The danger is that with hedge funds operating with very much the same business models and the fall in stock prices and other financial assets going across the board, the dash for cash can lead to a widespread sell-off and trigger a financial crisis.
The financial oligarchy is clearly taking the deepening crisis very seriously.
