Inquiry into death of Alexander Litvinenko opens in London

Julie Hyland

An inquiry into the death of the fugitive ex-Russian spy, Alexander Litvinenko opened this week—nearly eight years after he was murdered.
Litvinenko died from radioactive polonium-210 poisoning on November 23, 2006. It is claimed that the toxic element was contained in tea he drank during a meeting at London’s Millennium Hotel on November 1, with two former Russian KGB agents, Andrey Lugovoi and Dmitry Kovtun.
Litvinenko had been a lieutenant-colonel in Russia’s Federal Security Service (FSB, the successor to the KGB), but had reportedly fallen out with his associates over corruption allegations. In 1998, he charged that the FSB had given him the order to kill Boris Berezovsky, a Russian oligarch and opponent of President Vladimir Putin. Litvinenko was charged with abusing his office and spent nine months on remand before being acquitted. He fled to Britain in 2000 and was granted political asylum.
Berezovsky, who left Russia for the UK at the same time, became Litvinenko’s associate and patron. The oligarch died in suspicious circumstances at his home in March 2013.
Litvinenko went on to accuse the FSB of bombing Moscow apartment blocks and two other cities in 1999, as a pretext for Russia’s second invasion of Chechnya, as well as the 2006 murder of journalist and Putin critic Anna Politkovskaya. A close friend of Chechen separatist leader Akhmed Zakayev, also exiled in London, Litvinenko reportedly converted to Islam shortly before his death.
His killing was greeted with banner headlines, especially after traces of polonium-210 were discovered in hotels that Lugovoi had stayed in during his visit and the two aircraft on which he had travelled.
However, this was followed by damaging revelations that Litvinenko was working for Britain’s MI6 intelligence agency. The government has refused to confirm or deny his involvement but in 2007, the Daily Mail cited intelligence sources claiming that Litvinenko was paid about £2,000 per month for his services and alleged that then MI6 head, Sir John Scarlett, was personally involved in his recruitment. There is also evidence that he worked with Spanish, Italian and Georgian security services.
A British request in May 2007 for Lugovoi’s extradition to stand trial for Litvinenko’s murder was rejected by Moscow, on the grounds that Russia’s constitution forbids the extradition of its citizens. Lugovoi, who represents the far-right Liberal Democratic Party of Russia in the Duma, denies the charges and has accused British intelligence of involvement in the assassination.
The standoff presented major political difficulties for the British government, especially as London had become the home to numerous Russian oligarchs, many of them political opponents of President Vladimir Putin. With Litvinenko charging on his deathbed that his assassination had been ordered by the Kremlin, this raised concerns that the British capital had become the locus for internecine warfare within the Russian elite.
Russian-British relations deteriorated further, with the UK’s decision to expel four Russian diplomats in July that year. The move came as antagonisms between Moscow and Washington accelerated over a range of issues, including the US decision to station its anti-missile system in Poland and the Czech Republic. Putin responded by signing a presidential decree for Russia’s withdrawal from the Treaty for Conventional Armed Forces in Europe (CFE).
Backing for the UK’s action was cautious in Europe, however, especially given disputes over the status of Kosovo and fears for European gas and oil security.
Moreover, under conditions in which the Russian economy appeared to be enjoying a boom thanks to rising oil and gas prices, sections of Britain’s ruling elite were anxious that any further retaliatory measures would jeopardise UK investment and alienate Russian oligarchs fuelling London’s property and stock-market boom.
The case was parked. In 2013, a coroner’s inquest into Litvinenko’s death—required under British law—was delayed. Coroner Sir Robert Owen argued that his inquest was unable to hear confidential British intelligence material relevant to the case and requested a public inquiry, which can take such evidence in secret.
The government refused and was challenged in the High Court by Litvinenko’s widow, Marina. In February 2014, it ruled that ministers should reconsider the decision. Three months later, the government agreed to a public inquiry, headed by Owen.
The inquiry is unlikely to shed any real light on Litvinenko’s death. The government has set strict limitations. Much of the most important evidence will be heard in secret, with some of the 70 witnesses testifying from behind a screen. Others will be given complete secrecy. Parts of Owen’s report, which is not expected until the end of the year, will remain classified. Even Litvinenko’s widow will not be allowed to see the secret parts of the judge’s report.
Any examination of the role of Britain’s security services, and whether they could have prevented Litvinenko’s killing, has been ruled out. Notwithstanding the claim that the inquiry will impartially consider all theories—which include that Litvinenko was involved in smuggling polonium-210 and inadvertently poisoned himself—Owen has previously stated that he has seen evidence amounting to a “prima facie case” that Litvinenko was murdered by the Russian state.
The timing of the government’s decision and the opening of the inquiry is politically significant. It came against the backdrop of the Western-backed, right wing putsch in Kiev in February 2014, and the downing of Malaysian passenger flight MH17 over eastern Ukraine in July the same year.
Without any evidence, the NATO powers seized on the MH17 atrocity to press ahead with long-standing geo-political plans for the military encirclement of Russia and the destabilisation of the Putin regime. The US and the European Union imposed financial and diplomatic sanctions against Moscow which, combined with collapsing oil prices, have devastated the Russian economy. NATO has stepped up the stationing of troops and armaments on Russia’s borders and is now directly training Ukrainian forces, which include fascist militias, for Kiev’s bloody civil war in the east.
The forces overseeing the inquiry are poised to use it not to determine the circumstances of Litvinenko’s murder, but as grist for the mill of NATO’s anti-Russian propaganda campaign. The tone of the inquiry was set by Ben Emmerson QC, in his opening statement. Emmerson, a visiting professor in human rights law at Oxford University and United Nations special rapporteur on counter-terrorism and human rights, charged Putin directly with ordering Litvinenko’s murder.
Litvinenko was “eliminated” because he had made an enemy of the “close knit group of criminals who surrounded and still surround Vladimir Putin and keep his corrupt regime in power,” he said.
Accusing Moscow of carrying out “an act of nuclear terrorism on the streets of a major city which put the lives of numerous other members of the public at risk,” he said the inquiry would unmask Putin as “nothing more or less than a common criminal dressed up as a head of state.”

Gorbachev warns Ukraine could ignite World War III

Niles Williamson

Mikhail Gorbachev, the last president of the Soviet Union, accused the United States Thursday of initiating a new Cold War with Russia and expressed fears that the conflict could escalate into a nuclear Third World War.
Gorbachev made his comments as fighting escalated in Ukraine between forces directed by the US- and European Union-backed government in Kiev and pro-Russian separatists in the eastern Donbass region.
“Plainly speaking, the US has already dragged us into a new Cold War, trying to openly implement its idea of triumphalism,” the former Soviet leader told Interfax. “What’s next? Unfortunately, I cannot be sure that the Cold War will not bring about a ‘hot’ one. I’m afraid [the United States] might take the risk.”
He criticized the US and the EU for continuing to press for more economic sanctions against Russia. “All we hear from the US and the EU now is sanctions against Russia,” he continued. “Are they completely out of their minds? The US has been totally ‘lost in the jungle’ and is dragging us there as well.”
Earlier this month, Gorbachev gave an interview to the German news magazine Der Spiegel about the ongoing conflict between the US, EU and Russia over Ukraine. While he stated that it was “something that shouldn’t even be considered,” Gorbachev warned that a major war in Europe would “inevitably lead to a nuclear war.” He added, “If one side loses its nerves in this inflamed atmosphere, then we won’t survive the coming years.”
In the same interview, Gorbachev lamented these developments as the outcome of Washington’s construction of a “mega empire” in the aftermath of the dissolution of the Soviet Union.
Gorbachev, as the initiator in the late 1980s of the process of capitalist restoration, in the form of the policies of “perestroika” and “glasnost,” bears a huge degree of responsibility for the current crisis in Ukraine and the expansion of NATO. At the time, he argued that the relentless drive of imperialism toward war had been replaced by the pursuit of universal “human values.”
The decision of the ruling Stalinist bureaucracy to preserve its own interests by liquidating the Soviet Union and restoring capitalism allowed NATO to expand its reach to Russia’s Western border.
Gorbachev was not alone in warning of the dangers involved in the Ukraine conflict. Former US Secretary of State Henry Kissinger, who has been involved in countless crimes of US imperialism, spoke Thursday before the US Senate Armed Services Committee, declaring himself “uneasy about beginning a process of military engagement [in Ukraine] without knowing where it will lead us and what we’ll do to sustain it.”
The 91-year-old Kissinger added: “I believe we should avoid taking incremental steps before we know how far we are willing to go. This is a territory 300 miles from Moscow, and therefore has special security implications.”
The ongoing imperialist operations in Ukraine, from last year’s US- and EU-backed fascist-spearheaded coup to the ongoing fighting in the Donbass, as well as the current sanctions regime against Russia, are aimed at asserting US hegemony over all of the former Soviet Union and ultimately breaking the Russian Federation itself into a series of semi-colonies, opening the way for the plunder of its vast natural resources.
While there had been signs in recent weeks of a desire on the part of some EU states, in particular France and Italy, to begin rebuilding diplomatic relations with Russia, a deadly rocket attack on the Ukrainian city of Mariupol last weekend brought the EU members back into line behind the sanctions regime.
An emergency meeting of EU foreign ministers on Thursday decided to extend travel bans and bank account freezes against 132 Russian citizens and 28 organizations until September of this year. The foreign ministers will meet again on February 12 to discuss escalating the current tranche of economic sanctions against Russia.
Speaking after the meeting, German Foreign Minister Frank-Walter Steinmeier stated menacingly, “If there is an offensive towards Mariupol or other regions, one will need to respond with clear and harsher measures.”
In the wake of the EU foreign ministers meeting, Donetsk was subjected to a new round of artillery shelling. At least five civilians were reported killed when mortars struck a crowd of several hundred people waiting outside a community center for the distribution of relief aid.
Another two civilians were reported killed after a mortar shell landed near a bus stop. Artillery shelling throughout the day on Friday in western Donetsk killed at least five more civilians.
The pro-Russian separatists continued their assault on a key railway hub between Donetsk and Luhansk, taking control of the village of Vuhlehirsk, just west of a city, Debaltseve, where at least 8,000 Ukrainian forces are currently entrenched. While the city’s civilian population of 25,000 has for the most part been evacuated, at least seven civilians were reported killed by shelling on Friday.
Semen Semenchenko, founder of the Ukrainian nationalist Donbas Battalion militia, which has been integrated into the National Guard of Ukraine, reported that Kiev-backed forces in Debaltseve had been fired upon by artillery shells, mortars and grad rockets.
Ceasefire talks hosted by the Organization for Security and Cooperation in Europe that were set to resume on Friday failed to even get off the ground. Vladislav Deinego and Denis Pushilin, representatives of the pro-Russian separatists, announced they were leaving Minsk for Moscow after Kiev’s representative, former president Leonid Kuchma, failed to show.
The Ukrainian government and its backers in the US and the EU have shown little desire to reach a compromise with the rebels. Speaking in the UN Security Council last week, US Ambassador Samantha Power dismissed the latest Russian peace plan as an “occupation plan.”
On Friday, in a desperate attempt to stimulate its economy and avoid a devastating recession, the Russian central bank made a surprise announcement that it was cutting its key interest rate by two percentage points, to 15 percent. This decision came little more than a month after it raised the same interest rate by 6.5 percentage points, to 17 percent, in an attempt to stem the decline of the ruble, which has lost more than 17 percent of its value since the beginning of the year.
The sudden move by the Bank of Russia is an indication that the sanctions regime, combined with the collapse of oil prices, is contributing to a mounting political and economic crisis within Russia. According to preliminary reports from Russia’s Statistics Services, the country’s economy grew by a mere 0.6 percent in 2014. Citigroup projects that, if the average price of Brent crude oil remains deflated, Russia’s economy will contract by 3 percent in 2015.

Xenophobic attacks on foreign shop-owners spread in Gauteng, South Africa

Thabo Seseane

On Sunday, two victims were found shot to death in Langlaagte, Johannesburg, following a spate of attacks on foreign shop-owners in Gauteng beginning January 19.
According to the South African Police Services (SAPS), a group of people looted a foreign-owned spaza (tuck-shop, or candy store) in Langlaagte and set another building alight. Shots were then fired, resulting in the death of the two South Africans. The SAPS, who reportedly found one person on the road and another at Zamimpilo, a squatter camp near Langlaagte, are investigating a case of arson and murder.
The looting and violence are in response to the shooting death of 14-year-old Siphiwe Mahori in Snake Park, Soweto. The teen is alleged to have been part of a group who set upon a shop kept by Somali national Senosi Yusuf. Mahori died when Yusuf allegedly opened fire on the group.
Dan Mokwena, a 74-year-old Malawian shopkeeper, was attacked and killed as he slept in his shop on January 21. The Star reports that on the same day, a 19-year-old was shot in Naledi, Soweto, and declared dead on arrival at hospital. The youth, Nhlanhla Monareng, was a bystander when police fired into a crowd gathered at a Pakistani-owned shop.
A baby was trampled to death when a crowd fled from a shop they had just looted in Kagiso. The group rammed into a young woman who was carrying the baby. “In that commotion, the baby fell and was trampled by the fleeing mob,” said SAPS’s Lt.-Gen. Solomon Makgale.
Another bystander, 61-year-old Hendrick Manye, died when a foreign spaza-owner fired at a crowd stoning the shopkeeper’s premises in Swaneville, west of Johannesburg, on January 22. According to SABC News, African National Congress (ANC) veteran Winnie Madikizela-Mandela said on a visit to Manye’s relatives that it did not make sense for South Africans to attack shops owned by foreign nationals, whom they accused of taking away jobs.
Deputy Minister in the Presidency Buti Manamela said the looting cannot be justified. Manamela, national secretary of the Young Communist League, the youth wing of the Stalinist South African Communist Party (SACP), said young people claimed they looted foreign-owned shops to protect the economy of townships like Soweto. “We should stand up and say, not in our name,” he blustered. “Crime is crime. You cannot justify it.”
Such statements are worthless. Manamela and Madikizela-Mandela have still stuck to the script of the ruling tripartite alliance (the ANC, SACP and the Congress of South African Trade Unions) by insisting at every turn that the violence is merely criminal and not xenophobic. This is, in turn, an attempt to cover up the scandalous response of the ruling party to a previous outbreak of xenophobia.
Beginning in settlements like Diepsloot, north of Johannesburg, residents launched an orgy of looting, raping and killing directed against foreign traders in 2008. Many of them—in some cases refugees from war and repression seeking sanctuary in South Africa—lost their homes and livelihoods to the mobs. The government blamed criminal elements for the violence.
But in addition to declassed and desperate elements, there is a petty bourgeois element of South African spaza owners who benefit from anti-immigrant violence. South African traders have had difficulty in competing against foreign nationals, who live frugally, pool their resources, buy in bulk, and are thus able to offer township residents lower prices for staples and other necessaries. Foreign shopkeepers thereby save customers the expense of catching a taxi to a mall or centrally located discounter. They are also known to offer goods on credit to regular customers.
All this is anathema to local black shopkeepers. It also goes against the ANC government’s policy of Black Economic Empowerment (BEE), which explicitly excludes foreign nationals and is limited only to South African blacks, preferably members of the ruling party.
BEE is an anti-poor, bourgeois nationalist policy. With its extensions, affirmative action and preferential procurement, it relies on the wealthy middle classes and the most backward working-class elements to turn South African workers against their foreign compatriots. In this way, the ruling class seeks to build support for an economic policy that produces nothing but a thin layer of wealthy blacks whose existence depends on the redoubled exploitation of black workers.
With the breakdown of the global capitalist system since 2008, the government is under pressure to stem the tide of immigration into South Africa, which has the third highest number of asylum seekers, after the United States and Germany. According to Clementine Salami, Southern Africa Regional Representative of the United Nations High Commissioner for Refugees, asylum seekers in South Africa come mostly from Zimbabwe, the Democratic Republic of Congo and Ethiopia.
The Supreme Court of Appeal ruled last September that there is no law preventing refugees and asylum seekers from getting licences to operate South African spazas. Judge Mohammed Navsa, in delivering the verdict, chided the SAPS and the government, warning them to “guard against unwittingly fuelling xenophobia.”
There is nothing unwitting about the anti-immigrant intentions of the ANC government and those organs of the state it controls. The Supreme Court of Appeal judgment concerned Operation Hard Stick, an SAPS initiative which saw 600 spazas closed in Limpopo province, including licenced ones.
“The appellants asserted that the police often extort bribes and do not act against South African owned businesses, who are similarly not licence-compliant,” according to the Supreme Court ruling.
In the current xenophobic outbreak, various media outlets published photos of SAPS members loitering outside spazas in the process of being looted. The SAPS says it is investigating those officers.
Anti-immigrant looting and violence have since spread to Diepsloot and Alexandra, north of Johannesburg. Television news broadcaster eNCA reports that Gauteng police said a spaza in Alexandra was torched in the early hours of January 26. By then, 178 suspects (including children later released) had been arrested, 83 had appeared in the Protea Magistrates’ Court, and 95 were to appear in court on the same day.

Governments in Eastern Europe intensify attacks on democratic rights and immigrants

Markus Salzmann

Like the ruling elites in the West, the governments of Eastern European states are deliberately using the attack on Charlie Hebdo to restrict democratic rights and persecute refugees. Muslims in particular have been declared the enemy, strengthening extreme right-wing forces.
The Bulgarian government is planning new measures against refugees. The barriers on the existing 33-kilometre border with Turkey, which was constructed some time ago to prevent immigration from the neighbouring country, are being expanded by 82 kilometres at a cost of €46 million for this year alone.
To secure the Turkish-Bulgarian border, the right-wing government has increased its border police to more than 1,400. The regime in EU’s poorest country is also using the costs involved in its deployment at the border as a pretext for involving the army, thereby creating a precedent for military intervention in domestic affairs. Interior Minister Veselin Vutchkov demanded this explicitly. Defence minister Nikolai Nenchev made vehicles and weaponry available to the police units.
The government intends to shut down the border with Turkey for refugees under all conditions, since in neighbouring Turkey there are currently 2 million refugees, mostly from Syria. According to official statistics, around 38,500 refugees attempted last year to illegally cross the Turkish-Bulgarian border. Figures from Bulgaria’s state migration agency (DAB) suggest that 10,000 of these have applied for asylum.
Most of these people come from Syria, Afghanistan and Iraq, countries where the Western powers are responsible for wars, civil wars and catastrophic living conditions. Compared to 2013, the number of refugees has risen by 200 percent. Many refugees have been forced to spend the freezing winter in the border region in tents under horrendous hygienic conditions.
The Bulgarian government has justified its draconian new measures against refugees by claiming they are necessary in the “struggle against terror”. Former interior minister Svetan Svetanov, who is a member of the governing GERB party and acts as a domestic adviser to Prime Minister Boiko Borisov, bluntly declared that an increase in the flow of refugees inevitably increases the risk of a terrorist attack.
The United Nations High Commission for Refugees (UNHCR) and some NGOs have criticised the border barrier, because it forces refugees to pursue more dangerous routes, such as crossing the Mediterranean Sea, to reach the EU.
Hungary’s right-wing Fidesz government is already well known for its inhumane treatment of refugees and minorities. Hungary has no need for any economic migrants, Fidesz parliamentary fraction head Antal Rogan told the state radio broadcaster. It had been “proven that the presence of Islamic communities in Christian countries in Western Europe disturbs domestic order, for example in the United Kingdom, France and Germany.”
Interior Minister Laszlo Trocsanyi explained the necessity of a European-wide terrorist database that should also include Hungary. At the same time, he announced further measures at the national level. According to previous reports, an action plan already announced by Prime Minister Viktor Orban will be adopted, and includes a range of measures to grant the police, army and intelligence agencies comprehensive powers.
Terrorism as a daily reality, according to the Hungarian regime, was forcing Hungary and Europe to reconsider its anti-terrorist strategy and immigration, and more. “I think the United States could serve as an example here, including its anti-terror laws,” said Rogan. Rogan’s suggestion was met with enthusiasm from the right-wing party Jobbik, the third-largest party in parliament. The neo-fascists have been conducting a campaign of hate propaganda against foreigners for years.
In the Czech Republic, the utterly discredited and unscrupulous political elite is using the attacks in Paris to conduct a disgusting campaign against Muslims. State President Milos Zeman declared publicly that immigrants have a “genetic dependency” that they could not deny. Muslims had only themselves to blame for having to live in ghettos in Europe’s major cities, Zeman claimed.
Zeman is already well known for his anti-Islamic comments. In 2011, he told a conference that Islam was “the anti-civilisation that stretches from North Africa to Indonesia, the enemy of NATO,” and that these countries, populated by around 2 billion people, were “financed partly by drugs, partly by oil.” He told a news magazine in the same year that the idea that there was a moderate Islam was just as wrong as the claim that there were moderate Nazis.
Zeman and other leading politicians have incited the dregs of society with their tirades. A crowd numbering about 600 participated in an anti-Islam demonstration two weeks ago. In front of Prague Castle, the main residence of the Czech president in the capital, they chanted racist slogans and held up placards stating, “Wake up, Europe” and “Stop Islam.” The group “No Islam in the Czech Republic” intends to collaborate with the German Pegida movement in Dresden, 150 kilometres away.
The attacks on immigrants, which go hand in hand with restrictions on democratic rights and the adoption of police state measures, are directed against the entire population. The unstable governments in Eastern Europe fear that repeated protests could turn into a mass movement in the face of worsening economic conditions.
The recently announced removal of the link between the Swiss franc and the euro threw thousands of families into poverty in Southern and Eastern Europe. The free floating of the franc will result in a sharp rise in mortgage costs. The exchange rate of the franc rose massively overnight, thereby increasing repayment rates by 20 percent. In Hungary, Poland, France, Greece, Croatia and Serbia, the majority of mortgages are denominated in foreign currencies, particularly Swiss francs.
In Poland, central bank governor Marek Belka has already announced extraordinary measures. According to the Polish financial supervisory authority, outstanding loans in Poland amounted to €31 billion.
In Croatia, the government announced it would peg the exchange rate of its currency, the Kuna, with the franc for a year. Prime Minister Zoran Milanovic announced his plan earlier this week to fix the Swiss franc exchange rate at 6.39 kuna. The official exchange rate is more than 7.60. Since the free floating of the franc, the kuna has been devalued by 18 percent. While there are strong doubts among analysts that this measure will be effective, it is definitely politically motivated. After the governing Social Democrats suffered a painful loss in the presidential elections, “Milanovic is considering the forcible transformation of the franc loans into kuna so as to win back the allegiance of supporters,” opined the Frankfurter Allgemeine Zeitung.
Hungary was thrown into a similar crisis in 2008-2009. There, around 90 percent of loans were denominated in francs. “The credit rating for Hungary exploded, many of those affected could no longer service their debts, losing their houses and apartments,” Die Welt reported.

German Social Democratic leader enters into discussions with Pegida

Ulrich Rippert

On Tuesday Gregor Gysi, head of the Left Party fraction in parliament, rushed to the assistance of SPD leader Sigmar Gabriel to defend his discussions with Pegida members. The SPD chief and vice chancellor participated in a discussion event with Pegida demonstrators in Dresden on Friday evening, organized by the Center for Political Education in the state of Saxony.
Gabriel’s discussion initiative provides official recognition to the movement of the self-styled “Patriotic Europeans against the Islamization of the West” (Pegida) precisely at the moment when the openly fascistic character of this grouping has become clear.
Two days earlier, the founder of the right-wing demonstrations, Lutz Bachmann, resigned after it emerged that he had made Internet postings calling foreigners “cattle,” “garbage,” and “filth.” The Pegida founder also posted a picture of himself with a Hitler moustache and hairstyle on Facebook. The public prosecutor’s office has started investigative proceedings against him.
Nevertheless, Gabriel met with Pegida demonstrators. After the meeting, Gabriel claimed he had participated in the exchange of ideas with Pegida neither in his official government capacity as vice chancellor nor in his role as head of the SPD. He absurdly claimed he was in Dresden only by chance and had taken part in the meeting as a private individual, out of personal interest. In fact, Gabriel sought to use his position as a high ranking representative of the government and of the SPD in order to provide the right-wing movement with official legitimacy.
Gabriel and Gysi justify their discussions with Pegida by claiming that the right-wing marches reflect legitimate fears and concerns of broad sections of the population. Gysi told Tagesspiegel that the “large support for Pegida demonstrations” is a result of the “excessive demands imposed on people,” particularly in the eastern states of Germany. Former East German citizens were suddenly made “not only into German citizens, but at the same time into European and world citizens.” As a result, they experienced “how everything in their surroundings became alien when other cultures and other people began to have an influence.”
These same arguments have been used for months in order to legitimize and justify the racist and anti-Islamic marches.
The truth is that the right-wing demonstrations are the result of a deliberate political and media campaign, during which it has also become well known that Pegida initiator Lutz Bachmann has a criminal record, is still on parole, and openly voices racist and fascistic standpoints.
Last fall, when he called for Monday protests “against the Islamization of the West,” only a few dozen radical right-wingers attended. However, these demonstrations received thoroughly disproportionate attention in the media and politicians of all parties proclaimed their understanding of the “justified concerns” of the demonstrators.
The number of participants in the demonstrations was systematically exaggerated by the police and the media. As the counter-demonstrations increased in size, the media reacted by focusing even more attention on them, publishing reports, interviews with Pegida demonstrators and discussions with experts. On Sunday evening a week ago, Kathrin Oertel, chief organizer of the protests and a childhood friend of Lutz Bachmann, was invited to Günther Jauch’s prominent TV talk show.
This gave her the opportunity to present her fascistic views to a mass, primetime audience. She used the opportunity to attack multiculturalism, Koran schools and supposed hate preachers. At the same time, she demanded more restrictions on the right to asylum. She was supported by the vice president of the right-wing conservative Alternative for Germany (AfD), Alexander Gauland, who called Pegida the natural ally of his party.
It is no accident that both SPD head Gabriel and Left Party parliamentary fraction chief Gysi call for dialogue with Pegida. This becomes clear in the context of the recent developments in France and Greece.
The former president of the Socialist Party and current French president, François Hollande, has systematically exploited the terror attack on the satirical magazine Charlie Hebdo in a campaign against Muslims. At the same time, he has curried favor with the fascistic Front National (FN) by inviting its leader Marine Le Pen to the Elysée Palace.
And on Monday, Alexis Tsipras used Syriza’s election success in Greece to enter into a coalition with the openly racist right-wing conservative party, the Independent Greeks (Anel).
This alliance of social democrats and “lefts” with right-wingers, racists and fascists is symptomatic of the rapid intensification of the international economic and social crisis. Amid unprecedented social inequality and the division of society into rich and poor, the entire bourgeois political spectrum—parties from the “left” to the right—is closing ranks on the basis of nationalism. They all seek to divert growing class tensions in a right-wing, nationalist and racist direction.

Delinquency rates for auto loans hit highest level since 2008

Douglas Lyons

The rate of missed payments for auto loans has reached the highest level since 2008, showing the effect of the stagnation of workers’ incomes and the increasing prevalence of predatory practices by banks and auto lenders.
The Wall Street Journal reported that more than 2.6 percent of auto loan borrowers who took out loans in the first quarter of 2014, had missed a payment by the end of the year. Default rates were even higher for borrowers with credit scores lower than 620, which hit 8.5 percent.
In 2014, subprime auto loans (those issued to borrowers with bad credit) reached the highest levels since 2007, and were up by 15 percent over 2013. “It’s clear that credit quality is eroding now, and pretty quickly,” Mark Zandi, chief economist at Moody’s Analytics, told the Wall Street Journal .
Writing on the growth of subprime auto loans, New York Times noted that, “a growing number of lenders are using new technologies that can remotely disable the ignition of a car within minutes of the borrower missing a payment. Such technologies allow lenders to seize collateral and minimize losses without the cost of chasing down delinquent borrowers.”
Some auto lenders target people with risky credit, since they can gouge high interest rates out of them and use compulsory methods to force then into borrowing more.
One example is 48-year-old Patrina Thomas from upstate New York, who was convinced by a dealership to trade in her 2002 Jeep for a car with a sticker price of $17,000, according to the Wall Street Journal. A lender gave her a loan with an interest rate of 20.4 percent, making monthly payments total $385. The car eventually was repossessed.
“The industry is starting to do some stupid things,” Honda’s American vice-president of sales told the Wall Street Journal. “The longer-term loans coupled with greater use of subprime financing can leave buyers paying interest rates as high as 22%, much higher than what is typical for prime buyers,” he said.
Auto financing has been one of the fastest-growing lending sectors, and total auto loan balances reached $943.8 billion by the end of last year, an increase of about $134.8 billion, according to the Federal Reserve.
Amid growing concerns over predatory auto lending, regulators have said they may scrutinize some of these practices. Darrin Benhart, a risk management supervisor for the Office of Comptroller of Currency, an agency that regulates the largest US banks, told the Wall Street Journal, “We’re putting banks on notice that we have concerns. It’s definitely an area that warrants some attention.” It is clear from the experience of the 2008 financial meltdown, however, that the government will do nothing to reign in this type of predatory lending.
Located in Detroit, Michigan, Ally Financial was bailed out by the federal government in 2009 after it suffered billions in losses on subprime mortgages. It is currently the largest auto lender in the United States. A spokeswoman from Ally, Gina Proia, sought to downplay the increase in default rates, telling the Wall Street Journal that the increase can be attributed “to growth in the consumer portfolio as well as our strategy to diversify the business and book a more balanced mix of assets. The increase in losses was expected and in line with our expectations. We continue to have a robust underwriting policy and price for risk appropriately.”
While the subprime auto loan sector is still substantially smaller than the subprime mortgage market that helped trigger the 2008 financial collapse, it is an indicator of the types of practices that major lenders continue to engage in. Nearly seven years since the 2008 crash, the same types of speculative and fraudulent activities that helped cause the financial meltdown are back in full swing.

Mass layoffs at northwest Indiana steel mills

Jeff Lusanne

Under the impact of falling oil prices and the global economic slowdown, layoffs have begun in northwest Indiana—a major center of the US steel industry. Last week, US Steel announced the idling of its tin mill in East Chicago, Indiana, laying off 369 workers. ArcelorMittal, the world’s largest steel producer, also announced the closure of a portion of its massive Indiana Harbor complex, the Long Carbon facility, which will affect 300 jobs.
The layoffs are likely only the beginning, as a combination of factors in the world economy lead to reduced demand internationally for steel. West Texas Intermediate (WTI) crude oil, a major benchmark for oil prices, has fallen from $110 per barrel in the summer of 2014 to $45 per barrel at present. The collapse of oil prices has reversed the rapid growth of American shale oil and Canadian tar sands production and led to mass layoffs, with 16,000 job losses in Texas and North Dakota alone announced in January.
Shale oil production, using the process of hydraulic fracturing, or fracking, relies on a large quantity of steel pipe to pump fluids and sand into a well and pump oil out. With the collapse of shale production, steelmakers are pulling back on so-called oil country tubular goods, which had been a large growth segment of their production.
Every week brings more announcements of layoffs at US Steel, where job losses have now surpassed 1,300. In the first week of January, it announced the idling of its plant in Lorain, Ohio, leading to 614 layoffs. Another 142 workers in Houston, Texas, also lost their jobs. More recently, US Steel announced it would significantly scale back operations at its Fairfield Tubular Operations and Fairfield Works in Fairfield, Alabama, as well as its Lone Star Tubular Operations in Lone Star, Texas. Both facilities produced pipe and tubes for the oil and gas industry, and as many as 1,918 workers will be affected by those layoffs.

US Steels East Chicago tin plant, which will be idled in mid-March, laying off 369 workers

In East Chicago, US Steel is idling its tin plant, which makes tin-plated metal largely for canned foods. US Steel also warned it would permanently close is coke-making operations at its Granite City, Illinois, works, near St. Louis, laying off 176 workers. Aside from falling oil prices and production, there is also falling demand globally for steel and a supposed glut of production. Asia, especially China, has been a major market for steel, but China’s growth rate for 2014—at 7.4 percent—is the lowest since 1989. The stagnant Eurozone economy offers no outlet for steel production. Steel and the raw materials that make it are plummeting in price; iron ore is trading at its lowest level since 2009.

ArcelorMittall’s Indiana Harbor Long Carbon plant, which will be idled beginning on March 1, affecting over 300 workers

ArcelorMittal’s Indiana Harbor Long Carbon plant makes steel bars that are primarily used in the auto industry. Formerly run by Inland Steel, the mill was originally opened in 1901, shut down temporarily in 2009, and reopened in 2010. ArcelorMittal officials claim the facility has lost money since 2011 and that it can produce its steel bars more cheaply in Germany and Canada.
The 246 unionized workers at the mill—members of the United Steelworkers of America (USWA) Local 1101—and 58 salaried employees are being affected by the closure. In December 2014, ArcelorMittal also idled the Indiana Harbor West No. 2 galvanizing line as production was transferred to a plant in Alabama. In both cases, the company has claimed workers will be transferred to other facilities in Indiana Harbor complex, which is the largest integrated steel mill in North America, employing approximately 4,850 people.
The USWA has not even made a pretense of opposing the layoffs. Instead it is engaged in a reactionary, chauvinist campaign against the “dumping” of cheaper steel by foreign countries, particularly Korea. Allied with steel company executives and Democratic Party politicians in the Alliance for American Manufacturing, the USWA is demanding protectionist measures in the name of defending “national security” against China and other countries.
The USWA, along with other unions like the United Auto Workers, used such nationalist “Buy American” campaigns in the 1970s and 1980s to prevent a struggle by workers against the corporations and the capitalist system responsible for plant closings and layoffs. These campaigns, which sought to drive a wedge between American workers and their international brothers, never saved a single job.
In any case, US Steel and ArcelorMittal are both global corporations that seek, with the assistance of the unions, to pit workers against each other in a race to lower costs.
With an increasingly dire world economic outlook for steel demand, these are likely not the last steel industry layoffs in northwest Indiana, which has several large ArcelorMittal and US Steel mills. A significant amount of total production goes to the auto industry, and any drop in auto sales will ripple back. Additionally, the new Ford F-150 pickup truck, the best-selling vehicle in America, is using a mostly aluminum body instead of steel.
Northwestern Indiana has already been devastated by the long-term loss of industrial jobs. East Chicago had a population of 29,698 in 2010, down from a population of 57,669 in 1960. The Census Bureau’s five-year (2009-2013) survey estimates a poverty rate of 35.7 percent for individuals and a median household income of $27,500 in the city on the Indiana-Illinois border. The latter figure is barely half of the national mean income.

Marktown, a neighborhood surrounded by the plant closures, already has boarded up homes and a closed restaurant

One neighborhood, Marktown, is surrounded by plant closures and is already pockmarked with boarded-up homes. On its southwest border, the US Steel tin plant will close. To the southeast, the ArcelorMittal Long Carbon plant will close. Across from that lie acres of the Indiana Harbor complex that were abandoned long ago. Indiana 912/Cline Ave, an abandoned elevated highway, is nearby, partially demolished. Some four-lane concrete roads are already empty of traffic, even during a weekday.
To the northwest of Marktown, there is the massive BP Whiting Refinery. The global energy giant is pointing to the drop in oil prices to justify freezing the wages of its non-union workforce at the refinery and demands for concessions from the USWA after the current labor agreement runs out January 31. More than 2,800 construction jobs were lost in northwest Indiana in 2014 as construction wound down from the refinery’s expansion.

New figures show continued decline in US union membership

Shannon Jones

The rate of US union membership continued its fifty-year decline in 2014, falling from 11.3 percent to just 11.1 percent of the workforce. The new numbers released by the Bureau of Labor Statistics (BLS) show that unions added just 50,000 members last year compared to an overall employment growth of over two million.
Unionization rates are now at their lowest level in the US in 100 years. According to a study by two Rutgers economists, the 1916 US unionization rate was 11.2 percent. While public sector unionization showed a tiny rise in 2014, the private sector unionization rate collapsed to just 6.6 percent.
Even more striking was the decline in unionization in Michigan, once one of the most heavily unionized US states. The overall rate fell from 16.3 percent to 14.5 percent of workers in the state, representing a drop of 11 percent. In absolute numbers union membership fell by about 48,000 out of a prior total of 633,000. In 1964, 44.5 percent of Michigan workers belonged to unions, and, as late as 2004, some 21.6 percent of the state’s workers were still unionized. The state now ranks 11th in overall unionization. In 2003 it ranked third.
The decline in Michigan reflects in part the impact of recently enacted right-to-work legislation. The law, which took effect in 2013, prohibits the payment of union dues as a condition of employment. The intent of the measure was to criminalize any form of collective resistance by the working class. This does not alter the fact, however, that the UAW and other trade unions are essentially business entities, which have prospered through their collaboration in the destruction of the jobs and living standards of workers. After decades of such betrayals, the unions were incapable of generating popular opposition to the passage of the reactionary law.
With union membership now voluntary, tens of thousands of workers have stopped paying dues, seeing no reason to subsidize organizations that are hostile to their interests. The Michigan Education Association alone lost nearly 5,000 members, its rolls falling to 110,000.
The full impact of right-to-work in Michigan has yet to be felt, since the law did not cover workplaces with existing labor contracts. The contracts for the major auto manufacturers covering tens of thousands of workers in Michigan employed by General Motors, Ford and Chrysler expire in September 2015, and the new agreements will be barred from making union membership mandatory.
This presents a serious problem for the UAW, since it has alienated and angered workers through its decades-long policy of union-management collaboration that has decimated the wages and benefits of auto workers, once among the highest-paid industrial workers in America. The cuts imposed by the UAW have had a particularly terrible impact on younger workers, who now start at just a little more than half of the standard wage.
As a consequence of its betrayals, UAW membership has plummeted; it is now down to less than 400,000 compared to 1.5 million in 1979. In anticipation of a further massive decline once workers are no longer compelled to pay dues, the UAW forced through a 25 percent dues increase at its constitutional convention last year.
However, the UAW apparatus has been largely insulated from the impact of its repeated sellouts. The union has developed new sources of income based on its suppression of the class struggle: joint training, real estate and investment funds, and the control of multibillion-dollar retiree health care trust funds set up during Obama’s 2009 restructuring of Chrysler and GM. Despite the decline in membership, the UAW had nearly a billion dollars in assets in 2013, including $661 million in marketable securities, with hundreds of union executives on its staff earning more than $100,000 per year.
The UAW is not the only union whose treasury and officers are doing well financially. The American Federation of Teachers boasted net assets of $104 million in 2014, not counting the assets of affiliated locals, which in some cases are quite substantial. AFT President Randi Weingarten alone took in $557,000 in salary and expenses. The rival National Education Association, meanwhile, had total assets $336 million, according to its 2014 report and outgoing NEA President Dennis Van Roekel pocketed some $541,000 in salary and expenses. The Service Employees International Union, meanwhile, had $258 million in total assets, paying SEIU President Mary Kay Henry $295,000 in salary and expenses. Robert Buffenbarger of the International Association of Machinists topped this, taking in $319,000.
While feathering their own nests, the unions have worked to crush all manifestations of working-class militancy. The moribund character of the unions is reflected in the collapse in strike activity, which remains at historic lows. There were just nine strikes involving 1,000 or more workers in the United States in 2014, according to BLS figures. That compares to 235 in 1979, two years before the smashing of the air traffic controllers’ strike, and 424 in 1974.
Where the unions have called strikes they have been token affairs that were quickly sold out. An example was the one-day walkout called by the UAW at the Lear seating plant in Hammond, Indiana last September. The UAW ended the walkout claiming it had abolished the two-tier wage at the facility, which makes seats for Ford. In fact, the agreement called for the creation of a “third tier” of low-paid workers, starting a just $12 per hour.
The unions are able to stagger on only because of the support of a section of the corporate-political establishment, which values their services in disciplining the working class. Indeed, one of the highest points in US union membership came during World War II, when the Roosevelt administration brought the unions directly onto government-management boards, relying on the union leadership to drive up production, impose a wage freeze and enforce a no-strike pledge.
In the recent period, the UAW has sought and received management support in its effort to “unionize” Volkswagen’s Chattanooga, Tennessee assembly plant. The UAW and VW are working to establish what amounts to a company union at the facility by setting up a works council based on the German model of “co-determination.” After workers voted against the UAW in a union representation election, VW allowed the UAW into the plant anyway. The union is permitted to use company meeting rooms, post literature and meet regularly with plant management. If the UAW can convince an auditor hired by VW that it represents more than 50 percent of workers, it could be installed without another union representation election.
In exchange for recognition the UAW has pledged to maintain the factory’s cost-advantage over facilities run by the Detroit automakers and to underbid VW workers in other countries.
These facts speak for themselves. The US unions, like their counterparts globally, are anti-working class organizations defending the interests of a privileged upper-middle class layer whose income is dependent on its defense of capitalism and its suppression of workers struggles. To defend their interests workers must break with these organizations and build democratic rank-and-file organizations based on a new perspective and program. This means a struggle for the political independence of the working class based on a socialist and internationalist perspective.

Whistleblower who exposed CIA nuclear sabotage operation convicted under Espionage Act

Thomas Gaist

Former Central Intelligence Agency officer Jeffrey Sterling was found guilty of violating the 1917 Espionage Act Monday for providing information to the New York Times regarding covert operations conducted by the CIA against Iran. Sterling was convicted of nine felonies including illegally possessing and transferring secret government information. He could receive up to 100 years in prison after sentencing in late April.
Sterling allegedly spoke to Risen about the CIA efforts, codenamed Operation Merlin, as part of research for Risen’s 2006 book State of War. Operation Merlin sought to sabotage Iran’s nuclear program by selling the Iranian government flawed nuclear reactor blueprints through a foreign intermediary.
Risen resisted years-long efforts by the Justice Department to force him to testify against Sterling, stating that he would accept a prison term before doing so. The Obama administration dropped its efforts to coerce Risen once prosecutors became convinced they could convict Sterling without Risen taking the stand.
CIA officers who did testify in the case were concealed behind a dark screen. The federal prosecution team never introduced evidence that Sterling even spoke directly to Risen about the Iran operations. The only correspondence between the two presented to the court related to a separate issue.
Sterling informed the Senate Intelligence Committee in 2003-04 about CIA operations against Iran, and the leak could have originated from Senate staffers, Sterling’s defense attorney argued, pointing to the prosecution’s lack of direct evidence.
The case represents yet another victory for the Obama administration’s assault on investigative journalism, including the secret wiretapping of the Associated Press to identify “leakers” and the prosecution of Chelsea (Bradley) Manning for providing information to WikiLeaks. The administration has prosecuted more cases under the Espionage Act than all previous presidential administrations combined.
The Obama administration’s surveillance and prosecution of journalists has produced a “chilling effect,” with sources in the government and corporate bureaucracies suddenly going silent, according to leading journalists. As Risen noted in an interview with the Times last August, President Obama is “the greatest enemy to press freedom in a generation.”
The Obama administration is “going to bring these cases continuously to demonstrate that type of conduct by a government employee or a government contractor is going to be prosecuted,” a prominent New York lawyer told the Washington Post, referring to Sterling’s conviction.
Attorney General Eric Holder responded by declaring that Sterling’s conviction was the “just and appropriate outcome” of the trial. Sterling’s communications with Risen “placed lives at risk” and represented “an egregious breach of the public trust,” Holder said.
In essence, Sterling has been convicted for allegedly leaking information about illegal CIA covert operations, that is, for helping expose a criminal conspiracy orchestrated at the highest levels of government.
Holder, on the other hand, has committed grave crimes against the US Constitution. While serving on behalf of President Obama, Holder has overseen the destruction of central elements of the US Constitution, including the right to due process and protection from arbitrary searches and seizures. The attorney general will be known above all for his arguments in favor of the right of the president to assassinate US citizens without any legal procedure.

Concerns over Fed tightening as deflation fears grow

Nick Beams

In the wake of the decision by the European Central Bank (ECB) to institute quantitative easing through the purchase of government bonds, questions have begun to be raised about whether the US Federal Reserve should continue with its plan to tighten monetary policy from the middle of this year by lifting interest rates. There are even suggestions that it should resume the purchase of financial assets, a program it halted in October.
With the Fed’s policy-making Federal Open Market Committee meeting this week, most economists expect no change in the US central bank’s previously stated plan to begin gradually raising rates later this year.
At a meeting held during last week’s World Economic Forum in Davos, Switzerland, former US Treasury Secretary and Obama administration economic adviser Lawrence Summers warned that a deflationary spiral could ensue if the Fed tightened its monetary policy too soon.
“Deflation and secular stagnation are the threats of our time,” Summers told a Bloomberg forum. He went on to say there was no confident basis for tightening and any threat of inflation was a long way off.
Summers warned that the world economy was headed for treacherous waters because the US economy was entering its seventh year of recovery, nearing the end of its life expectancy, after which there could be another, unexpected, recession. “Nobody over the last 50 years, not the IMF, not the US Treasury, has predicted any of the recessions a year ahead,” he said.
Responding to Summers’ remarks, International Monetary Fund Managing Director Christine Lagarde said she hoped he was wrong because the world economy was “short of any engine at the moment.”
Since the eruption of the global financial crisis in September 2008, the US Fed has pumped some $4 trillion into the financial system and kept interest rates at near-zero. Last October, it ended its program of direct asset purchases and indicated that this would be followed by a gradual lifting of official interest rates in attempt to resume a more normal monetary policy.
This agenda seemed to be proceeding in line with an accelerated growth in the American economy, but has now been called into question by the emergence of outright deflation in Europe and the worsening downturn to which the ECB’s quantitative easing decision is a response.
Summers’ concerns were echoed in remarks by the head of the Bridgewater hedge fund Ray Dalio. He warned that what he called the “central bank supercycle” of ever-lower interest rates and increased debt-creation had reached its limits. Interest rates were already so low that the transmission mechanisms of monetary policy had broken down.
Dalio recalled the situation in the early 1980s in the US when a high dollar value and high interest rates plunged the American economy into a deep recession. However, he said, there was a major difference between then and now that made the present position “ominous.”
“Back then we could lower interest rates,” he said. If we hadn’t done so, it would have been disastrous. We can’t lower interest rates now. We’re in a new era in which central banks have largely lost their power to ease.”
New York Times op-ed columnist and Princeton economics professor Paul Krugman has also voiced disagreement with US monetary policy, writing last week that he was “very worried that the Fed may be gearing up to raise rates too soon” and expressing his agreement with Summers.
Both Summers and Krugman come from what could be considered the liberal pro-Keynesian wing of the US economic policy establishment. But opposition to the present course has also emerged from what might be considered an unlikely source.
In a comment published earlier this month, John Makin of the right-wing, free market American Enterprise Institute also voiced concerns. The Fed’s message was that interest rate increases squared well with increased growth and lower unemployment, he wrote, but this was “bizarre” in conditions of falling inflation and the deflationary impulse coming from falling oil and commodity prices and a stronger dollar.
“The Fed has decided simply to assert that US deflation won’t materialize, so it will continue on its current path toward mid-year tightening. This is a dangerous course to follow, especially in view of rising global deflation pressure,” he wrote.
Makin noted that the expectation of falling prices was lowering consumption demand, as purchases were put off in the expectation that tomorrow’s prices would be lower than today’s. It was having an adverse effect on already low investment rates because if US inflation went negative, as it already has in a number of European countries, the real interest rate would rise, raising the cost of borrowing.
Bankers speaking at the Davos gathering also warned that financial markets could experience heightened volatility once the Fed started tightening. They claimed that regulators were starting to share their concerns.
Anshu Jain, the co-chief executive of Deutsche Bank, said he was “relatively comfortable” if there was a major unwinding in sovereign debt markets, as there were ways to work it out. “My main worry is if the same thing was to happen in investment grade credit, or, even worse, in the high yield or leveraged loans market,” he said.
Leading bankers are claiming that increased regulations introduced as a result of the 2008 crisis have meant that they are not able to hold large stocks of such investments and cannot provide liquidity by purchasing these assets from those who want to sell.
The Financial Times has reported that a clash erupted at two closed door meetings at Davos between Jain and other bankers on the one side, and US Treasury Secretary Jack Lew and Bank of England Governor Mark Carney on the other, over whether the “flash crash” of last October, when market conditions briefly recalled those of 2008, was caused by new regulations.
The disputes over the Fed’s tightening trajectory, the impact of deflation and the causes of market volatility point to the intractable nature of the global economic breakdown. The Fed’s agenda is far from representing some major clampdown on financial markets, but is guided by the belief that the issuing of endless supplies of money cannot continue indefinitely, and at some point monetary policy must start to return to at least a semblance of normalcy.
However, even the initial limited steps in this direction have prompted predictions that they will give rise another financial crisis.
On the other hand, there are warnings that, far from being an antidote to financial crisis, quantitative easing itself is creating the conditions for another meltdown. One of the leading proponents of this view is William White, former chief economist at the Bank for International Settlements, who warned well before the Lehman collapse in 2008 that a crisis was building up as a result of the expansion of credit.
In an interview with the British Daily Telegraph on the eve of the Davos summit, he said the major central banks were inflating asset bubbles through quantitative easing, while beggar-thy-neighbour currency devaluations—themselves one of the products of QE—were spreading.
“We are in a world that is dangerously unanchored,” he said. “We’re seeing true currency wars and everybody is doing it, and I have no idea where this is going to end.”
He said quantitative easing by the ECB was not going to help because the European economy had a greater reliance than the US on small and medium-sized companies that obtained their money from banks, not bond markets, and the banks were cutting back their lending.
White noted that corporations in emerging markets, principally in Asia and Latin America, had up to $6 trillion of debt denominated in US dollars, and this was going to create a “huge currency mismatch problem as US interest rates rise and the dollar goes back up.”
So far as the liberal commentators such as Krugman and Summers are concerned, the key problem in Europe, which is at the centre of the global deflationary spiral, is the insistence of governments, led by Germany, on austerity.
In his Davos remarks, Summers spoke of the “irresponsible decision” to launch a currency union without a fiscal union to back it up, leading to a refusal to share liabilities and a dysfunctional system.
But, contrary to Summers, the essential problem in the design of the EU is not a lack of perspicacity. Rather, it is rooted in objective conditions—the division of the continent into conflicting nation-states. While it initially provided a certain limited degree of economic unification, the monetary union is foundering on the contradictions created by this system.
Krugman takes a similar position, blaming the mounting crisis either on intellectual failings or psychological problems.
In a New York Times column published on January 22, he claimed that European austerity reflected a “wilful misdiagnosis of the situation.” Officials in Berlin and Brussels chose to ignore evidence that the excesses which led to the crisis flowed from private rather than public debt. Pursuing a narrative that blamed budget deficits, they then imposed spending cuts, rejecting evidence that such measures would further depress the economy.
Such analysis is aimed at covering over the fact that the policies of the European governments were not the result of a false analysis, but the expression of definite class interests. Nowhere has this been more clearly demonstrated than in Greece, where money obtained through cuts under the so-called bailout measures has been used to get the major private banks off the hook.
Likewise, German opposition to quantitative easing, which American financial interests have demanded be implemented, is not the result of some misplaced ideology, but reflects the position of German finance capital.
Having lost large amounts of money in the US-based sub-prime crisis, German banks, which were the first to be affected in 2007, fear that further financial “innovation” will lead to another crisis and severely impact on their position, weakening them in the struggle with their rivals in the US and elsewhere.
The mounting disputes and conflicts testify not only to the absence of any coherent economic program to resolve the breakdown, but also to the growing rivalry between the major powers that will further develop as the crisis deepens.

Japanese government exploits hostage crisis to push remilitarisation

Ben McGrath

The Japanese government has announced that it will use the current parliamentary session to push through a raft of legislation to codify its “re-interpretation” of the country’s constitution to allow for “collective self-defense.” Prime Minister Shinzo Abe is exploiting the current hostage crisis, in which Islamic State of Iraq and Syria (ISIS) has killed one Japanese citizen and continues to hold another, in a bid to overcome public opposition to remilitarisation.
The regular 150-day session of the Japanese parliament or Diet that began on Monday is the first since the ruling Liberal Democratic Party (LDP) won reelection in December. Among some 80 bills expected to be submitted are 10 to remove restrictions on the Self-Defense Forces (SDF), Japan’s military. The LDP will begin negotiations with its coalition partner Komeito in early February and plans to submit the bills for a vote following April’s local elections.
Speaking to Japan’s NHK public broadcaster on Sunday, Abe declared: “The legislation is aimed at protecting the lives and well-being of the people by structuring a seamless legal security structure. For example, if Japanese abroad come under harm’s way, as in the recent case, the Self-Defense Forces currently aren’t able to fully utilize their abilities.”
These new laws are being drawn up not to protect Japanese citizens, but to facilitate the Japanese military’s involvement in US wars of aggression, in particular its war preparations against China as part the US “pivot to Asia.” The legislation is in line with new defense guidelines that Washington and Tokyo agreed to last October.
The legislation will allow Abe to dispatch the SDF overseas without seeking the Diet’s approval. Currently, each time the militarily is sent abroad, a new law must be passed authorizing the mission, as was the case in Japan’s military support for the US invasions of Afghanistan and Iraq.
The proposed laws will ensure that Japan is more closely integrated into US war planning in Asia against China. The Pentagon regards its military bases in Japan as crucial components of its “AirSea Battle” strategy, which envisages a massive missile and air attack on Chinese mainland bases, missile sites, command centers and communications. Japan is also critical to another element of US military planning, for an economic blockade of China.
Other laws are specifically directed against China. These include allowing the prime minister to dispatch the SDF if foreign ships or people enter the waters around Japanese islands or land on the islands themselves. The disputed Senkaku/Diaoyu Islands in the East China Sea have been at the centre of sharp tensions with China since the Japanese government provocatively nationalised them in 2012 by purchasing three of the islands from their private owner.
A particularly insidious bill will allow the government to restrict the rights of Japanese citizens if Japan is attacked or threatened with an attack. The legislation will give the government broad scope to crack down on anti-war protests or opposition to remilitarization in Japan, on the pretext, for example, of a supposed threat from North Korea.
The Abe government is clearly considering measures that go beyond its proposals for “collective self-defense.” Reuters reported that at Abe’s request Japanese officials drafted a briefing paper last Friday to consider a series of questions, including whether the planned legal changes would allow Japan to launch a military attack on ISIS to secure the release of the hostages. The paper’s conclusion that there was no legal basis for such action could well be used by Abe to press for further legislative changes.
However, the briefing paper did conclude that the new legislation would permit Japan to give military support to the US-led war in Iraq and Syria. “We are proceeding with consideration of a legal framework to implement support activities necessary to support other militaries in contributing to Japan’s peace and safety and the peace and stability of the international community,” it stated, without directly referring to ISIS.
The current hostage crisis began on January 20 when ISIS released a video featuring two Japanese men, Haruna Yukawa and Kenji Goto, and demanding $200 million for their release. Yukawa was captured last August. Goto attempted to intercede for Yukawa in October but was also captured. In the video, ISIS gave a 72-hour deadline for Japan to pay the ransom or the two men would be killed.
The deadline expired Friday afternoon but it was not until late Saturday evening that a second video was released featuring Goto holding a picture of Yukawa, who had been beheaded. ISIS also changed its demand from a ransom to a prisoner exchange. The organization is seeking the release of Sajida al-Rishawi, a woman condemned to death in Jordan for her role in a 2005 terrorist attack at hotels in the Jordanian capital, Amman. ISIS issued a new threat saying Goto would be killed along with a Jordanian pilot on Wednesday if its demands were not met.
In 2013, Abe seized on a hostage crisis in Algeria, which resulted in the deaths of 10 Japanese citizens, to pass a new law watering down restrictions on the Japanese military. The law overturned a ban on Japan sending SDF vehicles, including armored vehicles, into a conflict zone.
The widespread public opposition to the government’s constitutional reinterpretation and the planned legislation finds no expression in the political establishment. The LDP’s coalition partner, Komeito, which is nominally pacifist, backed Abe’s constitutional reinterpretation last year and is looking for cosmetic changes to the new legislation. In relation to providing logistical support for US wars, spokesman Natsuo Yamaguchi said on Sunday: “As a basic rule, rear-line support should be to back the response of the international community based on a UN Security Council resolution.”
The opposition Democratic Party of Japan (DPJ) has yet to formulate a coherent stance on the government’s planned laws. Newly-installed DPJ leader Katsuya Okada tentatively pointed out that the legislation would mean Japan would be drawn into US wars. “If the United States requests more direct involvement, can the Japanese government refuse it by saying, ‘we only conduct humanitarian aid?’” However, he did not oppose the legislation, or involvement in US-led conflicts, outright.

India, US boost military-strategic drive against China

Keith Jones

The “Chief Guest” at India’s January 26 Republic Day parade, US President Barack Obama returns from a three-day visit to India with a series of agreements that dramatically enhance the Indo-US “global strategic partnership.”
Indian Prime Minister Narendra Modi—with whom the US had refused to have contact until early last year because of his role in instigating and facilitating the 2002 Gujarat anti-Muslim pogrom—lavished Obama with pomp and circumstance.
The US president replied in kind. In a break with Secret Service protocol, Obama appeared in an open public venue for a full two hours in order to oblige Modi’s request that he review the entire Republic Day parade. However, he did so in the comfort of the most extensive security operation ever seen. A security operation that included the mobilization of 50,000 Indian security personnel in New Delhi and its environs, a thousand snipers positioned along the parade route, a no-fly zone with air defenses co-manned by Indian and US military personnel, and, as its seventh and final “layer,” US warships in the Indian Ocean.
The smiles and embraces notwithstanding, behind all the bonhomie between Obama and Modi was cold calculation. The US is determined to make India the south Asian anchor of its “Pivot to Asia,” that is, its drive to strategically isolate, encircle and, if necessary, wage war on China.
Rattled by the near halving of India’s growth rate since 2011, the Indian bourgeoisie is desperate for US investment. And with ambitions to regional and world power status that far outreach its economic and military-strategic grasp, the Indian elite is eager to take Washington up on its cynical, self-interested offer to “help India” become a great power.
As expected, Obama and Modi announced that they had agreed on a new 10-year military cooperation agreement to replace the first ever such Indo-US agreement, which was set to expire later this year. Under the “2015 Framework for the US-India Defense Relationship,” the two countries have agreed to more intensive joint military exercises. The Pentagon, it should be noted, already stages more joint exercises with India’s military than any other. The agreement also calls for increased collaboration in maritime security.
Washington has long expressed support and promised assistance for India’s navy assuming a major role in policing the Indian Ocean, which not coincidentally is the conduit for much of the oil and other resources that fuel China’s economy.
Obama and Modi also announced that they were moving forward with four “pathfinder” projects under the India-US Defense Trade and Technology Initiative (DTTI), including coproduction of the Raven unmanned aerial vehicle (UAV) and an “intelligence, surveillance, and reconnaissance” module for the Lockheed Martin-manufactured C-130 J transport aircraft. To move forward with these and other projects, the Pentagon is establishing a DDTI “dedicated rapid reaction team.”
Developed by Ashton Carter, who is to succeed Chuck Hagel as US Defense Secretary, the DTTI offers India the possibility of coproducing and co-developing weapons systems with the Pentagon and US arms manufacturers. Its true purpose is to make India’s military increasingly dependent on the US. A further aim of this policy is to undermine the longstanding Indo-Russia military-strategic partnership. Just days before Obama’s India visit, Russian Defense Minister Sergei Shoigu visited New Delhi to try to remove hurdles in actualizing an Indo-Russian agreement to develop a fifth-generation fighter jet, as well as a plan to build 400 advanced helicopters in India per year.
Commenting on the military agreements he had reached with Obama, Modi said they take the “growing” Indo-US “defense cooperation to a new level.”
No less significant were the foreign policy positions India adopted in an Obama-Modi ”Joint Statement” and in a “U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region.” Many of them parroted US positions chapter and verse. Thus India criticized North Korea’s nuclear and ballistic missile programs and said the onus is on Iran to prove to the “international community,” i.e. Washington, that its nuclear program is “exclusively peaceful.”
Most importantly, India, as reported by the New York Times, adopted in toto the US-proposed text on the maritime territorial disputes that the US has encouraged between its East Asian allies and China. The “Vision” statement affirms “the importance of safeguarding maritime security and ensuring freedom of navigation and over flight throughout the region, especially in the South China Sea.”
Obama and Modi also announced that they had broken the six-year “logjam” in actualizing nuclear commerce between the US and India. The details of the agreement are far from clear. But India has indicated that it will take steps to insulate US nuclear-power companies like General Electric and Westinghouse from having to pay damages in the event their faulty equipment or other malfeasance leads to a catastrophic nuclear accident. Modi’s Bharatiya Janata Party (BJP) government will set up an insurance fund to pay limited compensation to accident victims. It will also issue a “memorandum of law” to clarify (in reality reinterpret and with the express aim of circumventing parliament) India’s nuclear liability law so as to make India’s government-owned nuclear power company solely liable for compensation claims.
Obama, for his part, has apparently abandoned the US’s claim to exercise control in perpetuity of all US-supplied nuclear equipment and parts, agreeing that IAEA (International Atomic Energy Agency) oversight will suffice.
According to news reports, a decision was taken at the highest political level in both countries to prevent the nuclear issue from interfering with the desire of both governments to “qualitatively reinvigorate their strategic ties.”
While Washington and New Delhi have claimed that the 2008 Indo-US nuclear accord, which paved the way for the US to negotiate India a unique position within the world nuclear regulatory regime, only concerns civilian nuclear energy, it in fact has huge military-strategic implications. Now able to purchase nuclear fuel and technology from abroad, India can concentrate the resources of its indigenous nuclear program on weapons development.
When not currying Obama’s favor, Modi was courting the large delegation of US businessmen who accompanied him to India. Addressing meetings of the US-India Business Council and the India-US CEO Forum, Modi promised the assembled business leaders that his government is at their disposal. He promised a “welcoming environment,” a “predictable and competitive tax regime,” and a government that will work to realize their projects, “protect” their intellectual property” and expunge the “excesses of the past.”
Obama, meanwhile, chided India for not doing more to open its economy to US investors. “There are still too many barriers, hoops to jump through,” he declared.
According to the New York Times, Obama and his aides were elated by the outcome of his India trip and particularly by the extent to which Modi shared the US’s attitude toward constraining and thwarting China’s rise. Reportedly at Modi’s initiative, China dominated the first 45 minutes of the discussion when he and Obama had their first sit-down meeting. An unnamed senior administration official told the Times that Obama’s conversation with Modi about China was “really qualitatively different” than those the US president had had with Indian leaders in the past. Said the official, “I really was struck that he took a similar view to us.”
The official was particularly pleased that Modi appeared ready to revive formal quadrilateral military-security cooperation with the US’s other key Asian-Pacific allies, Japan and Australia. In 2007, the four countries established a Quadrilateral Security Dialogue but Beijing objected strongly and the following year it was abandoned.
This week’s heightening of Indo-US ties, which follows on from their collaboration in the successful US-led campaign to unseat Sri Lanka’s president because he was deemed too friendly with China, has not been lost on Beijing.
China’s President Xi Jinping issued a Republic Day message in which he repeated his recent proposal that Beijing and New Delhi take their relations to a higher level. But in the government-owned Chinese media there was a spate of commentary questioning India’s intentions toward China.
A comment published Monday in two papers with close ties to the government, the People’s Daily and Global Times, warned New Delhi not to fall into a US “zero-sum trap.” Pointing to the US’s anti-China “Pivot to Asia,” the comment noted that the US has “ulterior motives” in depicting “the ‘Chinese dragon’ and the ‘Indian elephant’ as natural rivals.” It urged New Delhi to beware it not be maneuvered into becoming a US pawn so as to ensure Sino-Indian relations not take on the character of “a life-or-death struggle.”
While Obama was being feted by Modi, Pakistan Army chief General Raheel Sharif was visiting Beijing to meet with China’s foreign minister and other senior political and military leaders. A Pakistani spokesman said that during the talks China’s leadership reiterated that Pakistan is its “irreplaceable all weather friend.” Considered by India to be its archrival, Pakistan is currently facing a military-diplomatic campaign on the part of India’s Hindu supremacist BJP government to change the “rules” of their toxic bilateral relationship in its favor. The Indian press has carried reports from Indian army commanders in Indian-held Kashmir in which they boast that the new BJP government is encouraging them to inflict “unacceptable consequences” on Pakistani forces during cross-border firing and incursions.
By moving ever more tightly into Washington’s strategic orbit, the Indian bourgeoisie is assisting and encouraging US imperialism in its reckless and ruinous offensive against China—an offensive whose logic is war and nuclear conflict. It is also creating conditions in which the reactionary Indo-Pakistani military-strategic conflict, which is rooted in the communal partition of the subcontinent, becomes ever more entangled with the US-China divide, adding an explosive new dimension to each.

US announces plan to ration health care under Medicare

Kate Randall

The Obama administration has announced a major shift in the way Medicare will pay hospitals and doctors. Health and Human Services (HHS) Secretary Sylvia Burwell announced the initiative Monday following a closed-door meeting with representatives of the insurance industry, large employers and doctors’ professional organizations.
The shift moves the health care counterrevolution embodied in the 2010 Affordable Care Act (Obamacare) into high gear. Over the next three years, payments to hospitals and doctors for a large percentage of health care provided under Medicare, the government-run health insurance program for the elderly, will be shifted from the traditional “fee-for-service” model to alternative methods in which health care providers are rewarded for cutting costs and rationing care.
The radical revamping of Medicare will slash costs borne by the government, insurance firms and hospital chains by denying Medicare patients what is presently considered to be normal access to medical procedures, drugs and hospital care. The realignment of Medicare more directly with the profit dictates of the market will become the model for the American health care system as a whole.
Burwell told the media following the meeting, “Today’s announcement is about improving the quality of care we receive when we are sick, while at the same time spending our health care dollars more wisely.” The official line about improving the quality of health care, repeated by Burwell, is a cynical lie.
Medicare provides health insurance for 50 million elderly and disabled Americans at an estimated government cost of $600 billion a year. It is the largest single buyer of health care services in the US. It has for decades been a prime target of corporate interests and politicians seeking to roll back the social reforms of the 1930s and 1960s, who have always encountered massive popular opposition.
The program, notwithstanding the limitations, distortions and cutbacks inevitable within the framework of for-profit medicine, has played a major role in reducing the poverty rate of retirees in the US and extending life expectancy. It has taken a Democratic president, overseeing a conspiracy of the corporations and the state against the people disguised as a “progressive reform,” to initiate in earnest the drive to gut Medicare. The calculated aim is to throw millions of retirees into poverty and slash medical costs by shortening their life spans.
According to the time-table announced Monday, by next year Medicare will make 30 percent of its direct payments to doctors, hospitals and other providers in accordance with “alternative payment models.” Half of Medicare’s direct payments to providers are to be made in line with such models by 2018.
These new models build on experiments begun under the ACA, particularly through the use of so-called “accountable care organizations,” or ACOs. Providers will be given a lump-sum payment for treating a patient throughout a specific episode of care, such as knee replacement surgery, instead of being reimbursed for the individual medical components of that care.
HHS has also set a goal of tying 85 percent of all payments under traditional Medicare to measures of “quality” or “value” by the end of 2016, when Obama leaves office, rising to 90 percent by the end of 2018. How will this operate in practice? Hospitals with high rates of patients readmitted within a month of being sent home will face financial penalties, while those spending less on supposedly unnecessary treatments and tests will be rewarded.
HHS is creating an agency with the Orwellian title “Health Care Payment Learning and Action Network” to enforce these changes. This panel presumably will be tasked with targeting “frivolous” procedures and screenings for elimination in the interest of restoring “value” to the health care system.
HHS Secretary Burwell is ideally suited for leading this attack on Medicare. She is a veteran of the Clinton administration and the Treasury Department. She served as an aid to Microsoft founder Bill Gates, as president of the Walmart Foundation, and as a member of the Metlife insurance company board.
Serving under Obama as budget director from 2013 to 2014, when social spending was slashed by tens of billions, she was tapped by the president to succeed HHS Secretary Kathleen Sebelius last June following the disastrous roll-out of Obamacare’s HealthCare.gov web site. Obama praised her at the time as a “proven manager,” who, as budget director, had overseen a more than $400 billion decline in the federal deficit. She was confirmed as HHS secretary with overwhelming bipartisan support.
Under Obamacare’s individual mandate, individuals and families without insurance through their employers or a government program such as Medicare or Medicaid are required to purchase coverage from private insurers on the ACA’s health care exchanges or face a tax penalty.
The Obamacare ACOs are modeled on those already in existence in the private sector. These are growing in popularity among large employers. Justine Handelman, vice president for legislative and regulatory policy at Blue Cross and Blue Shield Association, which represents insurance companies, told Bloomberg, “Medicare is aligning with what is already working in the private sector to move away from fee-for-service. The private sector is further ahead than Medicare right now.”
Burwell has stated that phasing out fee-for-service payments will be a major priority of her tenure as HHS secretary. In addition to expanding ACO’s to Medicare, administration officials said Monday they plan to increase coordination of similar programs with state governments that insure millions of their poorest residents through the Medicaid program.
Seated next to Burwell at Monday’s meeting was Karen Ignagni, chief executive officer of America’s Health Insurance Plans (AHIP), the industry’s main lobby group. “Health plans have been in the forefront of implementing payment reforms in Medicare Advantage, Medicaid Managed Care, and in the commercial marketplace,” Ignagni said in a statement. “We are excited to bring these experiences and innovations to this new collaboration.”
This glowing tribute from the CEO of AHIP is further confirmation of the thoroughly right-wing character of Obamacare, which has nothing in common with a true reform of the health care system in the interest of providing universal, quality care. From its inception some five years ago, Obamacare has been aimed at enriching the insurance industry and health industry at the expense of vitally needed health care services for the vast majority of Americans.
It has been designed from top to bottom in the closest consultation with corporate lobbyists and lawyers, with no input from working people.
The sacrifices now being demanded of Medicare recipients in the interest of “quality” and “value” will translate into the withholding of medical treatments and procedures that will undoubtedly result in suffering and untimely deaths for American seniors.
The gutting of Medicare is one prong of an assault on health care that affects the entire working class and considerable sections of the middle class. A second major area of attack under Obamacare is the dismantling of employer-provided health care for active workers and retirees, the system that for nearly 70 years secured health coverage for most US workers.
Obamacare is designed to encourage employers to ditch their health insurance programs and force their workers onto the ACA’s health care exchanges. There, workers are forced, as individuals, to deal with gigantic insurance companies that offer high-priced plans providing sub-standard benefits.
The rich and the super-rich will, of course, continue to receive the best care money can buy.
Opponents of the predominantly fee-for-service system in Medicare bemoan the fact that the $2.9 trillion-a-year US health care system does not result in a healthier population than in those countries that spend far less per capita. It goes unmentioned that the obscene profit-gouging of private insurers, drug companies and hospital groups are responsible for this state of affairs.
The only solution to the health care crisis lies in taking the profit out of medicine, putting an end to privately owned health care corporations, and guaranteeing free, high-quality health care for all through the establishment of a democratically run, publicly owned socialized health care system.

South Africa’s politically connected elites profit amid power outages

Thabo Seseane

On Monday, ESKOM, the largest South African power utility, began implementing its second round of “managed” blackouts this year, cutting 2,000 megawatts from its grid because it could not meet demand. Tshediso Matona, ESKOM’s chief executive, has warned about the possibility of a total collapse of the power grid.
South Africa’s political elites are profiting from the crisis by awarding themselves massive contracts related to the construction of new power stations. In particular, a company directed by the wife of African National Congress (ANC) Secretary General Gwede Mantashe received a R639 billion ($55 million) contract for providing food to workers at the construction sites of the new Medupi and Kusile power plants.
The Sunday Times reported that the Kusile contract was awarded on October 1, 2013 to RoyalMnandi Duduza, part of the politically connected Bidvest group of which Nolwandle Mantashe, is a director. The five-year contract is worth R639 million, one of the largest ever sums for catering.
Another, worth R787 million, was awarded to Lephalale Site Services for catering at Medupi in Limpopo and expires this month. Then a new contract, “likely to push catering costs closer to R2 billion,” kicks in.
The Times, sister publication of the Sunday Times, reports that Nolwandle is also chief executive of Tamorah Resources, “a new company hoping to secure contracts to supply coal to ESKOM.”
In response to criticism over the impropriety of the awarding of the RoyalMnandi contract, she said, “I do not rely on political connections to do business but on capable black and white people.”
At a meeting of businessmen earlier in January, Matona was quoted as saying that “one unexpected event at any of ESKOM’s power stations could push the country to the total failure of the national electricity system” that could take weeks to resolve. ESKOM spokesman Andrew Etzinger said that Matona had been “misinterpreted” because of incorrect grammar.
Construction at Medupi and Kusile was announced after rolling blackouts began in 2005. Chancellor House Holdings, an ANC investment vehicle, owned 25 percent of the chosen boiler supplier, Hitachi Power Africa. Boiler construction and software were subcontracted after Hitachi's welding on boilers and its software failed tests.
The Public Protector probed the company’s ESKOM contract, not least because Valli Moosa, then ESKOM chairman, is a senior ANC member. The inquiry concluded that Moosa, now Anglo American Platinum chair, “failed to manage the conflict of interests,” and Hitachi could not guarantee that the ruling ANC would not benefit from the R50 million profit it stood to make through its Chancellor House stake.
Medupi is set to generate its first power this year—18 months behind schedule and at an estimated cost of R154 billion, more than twice the R69 billion originally projected.
Costs at Kusile have ballooned to R172 billion from an initially budgeted R80 billion.
The ANC called on ESKOM to “fast-track” construction at the two new power stations after the collapse of a coal silo at the utility’s Majuba facility in Mpumalanga led to rolling blackouts amid heavy rains in early December.
A year ago ESKOM was forced to ask major industrial clients including SABMiller, BHP Billiton and Glencore Xstrata to temporarily cut consumption by at least 10 percent to ease strain on the national grid. Irregular electricity supply is often cited as a reason for the spate of reviews and downgrades of public and private South African debt by international credit rating agencies.
Construction at Kusile ran behind schedule partly because of delays in the signing of a coal supply contract with Anglo American Inyosi Coal. Former ESKOM CE Brian Dames said in 2013 this was because powerful interests wanted ESKOM to sign a contract with a company that was black-controlled. As it is, Inyosi Coal is only 27 percent black-owned, by a consortium that includes Lithemba Investments and Pamodzi Investment Holdings, in which among others, former Deputy President Kgalema Motlanthe, have been involved.
Matona, the current ESKOM CE, attracted widespread ire with his remarks that the country, but not ESKOM, was “in crisis.”
At the Lethabo power plant which burns coal like most ESKOM power stations, the ash system failed. The plant effectively choked on its own waste, worsening the blackouts in December.
According to a clinic in the area, more people have shown signs of respiratory problems. Yet the Department of Environmental Services of the ANC government that appointed Matona, was not even aware of the dense cloud of toxic ash settling over the area.
In the run-up to the 2010 world soccer tournament, according to Matona, the government would not allow ESKOM to shut down plants for routine maintenance. With the 2009 general election adding pressure, ESKOM ran its existing plants at full tilt to keep the lights on at all costs, leading to more frequent breakdowns. “We are paying the price of these decisions,” Matona said. “That’s why we’re in the situation we’re in now.”
ESKOM warned as early as the first administration of former President Thabo Mbeki(1999-2004) that new investment in generating capacity was needed. Hoping to break up and privatise the utility, however, the neoliberals surrounding Mbeki ignored the advice until it was too late.
Mpumalanga, home province of Kusile, is like Limpopo, has also forked over to politically-connected businesses. Last March City Press reported that the newspaper was in possession of “copies of bank statements that show R39.8 million was paid to celebrity event planner Carol Bouwer in the space of a week.”
Bouwer’s company, which did not bid competitively for the job, was tasked by Mpumalanga Provincial Director-General Nonhlanhla Mkhize with organising memorial events following the death of former president Nelson Mandela on December 5, 2013.
This outlay took place with the full connivance of provincial Premier David Mabuza. As a result, City Press reported, “Mpumalanga’s government... shifted R70 million from six of its departments' service delivery budgets to cover employee salaries...”
The affected departments included social welfare services, public works and finance.