Indonesian authorities prepare for more executions

John Roberts

Indonesian President Joko Widodo’s government is preparing for another round of executions, involving 11 prisoners, following the death by firing squad of six drug offenders on January 18.
In a CNN interview on January 27, Widodo dismissed clemency appeals by lawyers or foreign governments. “No compromise, no compromise,” he said. “They can ask for amnesty to the president but I tell you there will be no amnesty for drug dealers.” He specifically ruled out clemency for two young Australian men, Myuran Sukumaran and Andrew Chan.
The next day, Attorney-General H.M. Prasetyo told members of the Indonesian parliament that his office was deciding on the timing and site for the executions. The isolated Nusakambangan Island, off central Java, he said, was an “ideal place,” for security reasons. Five of the six prisoners executed on January 18 were killed on the island by a police Mobile Brigade firing squad.
Lawyers for Sukumaran and Chan said they would apply for a second judicial review in Indonesia’s Supreme Court, based on a Constitutional Court ruling that recommended this for prisoners who have spent more than 10 years on death row. But Attorney-General Prasetyo said a meeting between his department, the Supreme Court and the Constitutional Court, had agreed the pair was not eligible for a second review.
Prasetyo said the government had made no decree to enact the Constitutional Court’s ruling. “We made the decision together, that before the government issues a governmental decree on it, then [a] judicial review can only be done once,” he said. His statement underscores the government’s determination to proceed with the executions.
Events are moving quickly in the state-organised killing process. The Indonesian media reported that Sukumaran and Chan would be put to death in the next round. Widodo rejected Chan’s clemency appeal on January 22, clearing the way for the two to be executed together.
Yesterday the Jakarta Post published the names of all 11 condemned to die. They include four Indonesians and foreign nationals from the Philippines, France, Ghana, Spain and Brazil. Apart from two Indonesians convicted of multiple murders, they have been convicted of relatively minor drug offences that occurred between 1999 and 2005.
These developments have caused deep public concern in Australia. Last night, artists, musicians and hundreds of people gathered in Sydney’s Martin Place for a vigil appealing for clemency. Sukumaran’s grandmother Edith Visvanathan made an emotional plea: “I come to ask pardon from the president, the president and the people of Indonesia, to forgive my grandson and give him a second chance.”
The impetus for the accelerated application of Indonesia’s death penalty laws is coming from Widodo himself, however. Three people were executed during the five years before Widodo’s installation as president last October. Now 17 have been put to death, or scheduled to be killed, within the space of two weeks. Eleven offences, ranging from murder to subversion and corruption, are punishable by execution under Indonesian law.
Widodo’s motives are entirely political. Under conditions of a deepening global economic crisis, falling oil prices and growing demands for austerity cuts and a radical pro-market restructuring of the Indonesian economy, Widodo is attempting to shore up his relations with the military-police security apparatus and right-wing Islamist groups.
During the 1965 CIA-backed military coup that overthrew the Sukarno government, the Indonesian security forces combined with right-wing Islamist groups to murder at least half a million Communist Party of Indonesia members, workers and peasants and install General Suharto’s military dictatorship, which lasted more than 30 years. These military and Islamist forces still retain a dominant position in the Indonesian state.
The Islamist organisations blame Western influence for producing an estimated five million drug addicts in Indonesia and demand a savage response from the state. The real source of the problem, however, is the mass poverty and despair produced by the enrichment of Indonesia’s ruling oligarchy at the expense of hundreds of millions of workers and peasants. Over half Indonesia’s 250 million people live on or below the miserably low United Nations poverty line of $US2 per day.
The fate of the two condemned Australians points to the close economic relationship and strategic partnership between Canberra and Jakarta, which also underpinned the sordid manner in which Australian police authorities set up both men in 2005 for arrest, and therefore execution.
On January 23, Australian Prime Minister Tony Abbott publicly called on Indonesian authorities to grant clemency for Sukumaran and Chan. He declared that both had reformed and helped rehabilitate other prisoners incarcerated in Denpasar’s Kerobokan prison on the island of Bali. No specific details have been provided about Abbott’s contacts with Indonesian officials, but the Indonesian foreign ministry made it clear that Canberra’s appeals have been presented in such a way as to not endanger the bilateral relationship.
The Australian government has not denounced the reactionary death penalty or criticised Widodo’s use of it, nor threatened diplomatic or economic sanctions if the executions go ahead. Labor Party opposition leader Bill Shorten has defended the Abbott government, declaring on January 23 that it was doing “everything it can” to prevent the execution of the two Australians.
Successive Liberal-National and Labor governments in Australia have worked assiduously since the 1965 coup to cultivate and maintain the closest relations with the Indonesian ruling elite. Former Labor Prime Minister Paul Keating hailed the bloody coup as the “most important contribution to stability” in South East Asia.
Canberra’s token appeals are entirely hypocritical. In 2005 the Australian Federal Police (AFP) supplied the Indonesian police with detailed information about a group of Australians—the “Bali Nine,” which included Sukumaran and Chan—who planned to import heroin into Australia from Bali. The AFP provided photographs, passport numbers and details of their movements and planned smuggling methods. The AFP knew that, as a result, the nine were likely to face death sentences.
Lee Rush, the father of one of the Bali Nine, contacted the AFP and was led to believe that the police would stop his son Scott before the group left Australia. The police reneged on this undertaking and allowed the Indonesian operation to proceed.
This AFP decision was vehemently defended by both Prime Minister John Howard and opposition leader Kim Beazley. It served two purposes. First and foremost, it sought to help rebuild the Australian political and security establishment’s connections with the Indonesian security forces, following strained relations between the two countries over East Timor in 1999–2000. Second, it side-stepped the abolition of the death penalty in Australia, where legislation also restricts the extradition of people to face possible execution overseas.
When Labor’s Beazley was asked in 2005 if the AFP had done the “right thing” in the Bali Nine case, he declared: “Australians do need to understand this—it is utterly critical for this nation that there is intimate collaboration between the AFP and the police forces of this region.”

Sydney siege inquest: An exercise in damage control

 Peter Symonds

The coronial inquiry into the December 15–16 cafe siege in Sydney began yesterday, but only for a short opening session. The carefully-managed hearing made clear that the overriding aim of the proceedings is to attempt to counter widespread public suspicion about what happened, while protecting the state and federal governments, police and intelligence agencies that were responsible for the tragic outcome.
Over the past six weeks, no official statement has been released concerning even the most elementary facts about the 17-hour siege that ended with the deaths of the hostage-taker Man Haron Monis and two hostages—barrister Katrina Dawson and Lindt cafe manager Tori Johnson. In a highly unusual step, State Coroner Michael Barnes instructed counsel assisting the coroner, Jeremy Gormly, to “answer speculation” and release some details of the events.
After outlining what he claimed would be a full investigation of the events, Gormly provided a highly-selective account of what took place on December 15–16 that pre-empted many of the issues that the inquiry is to examine. No evidence was provided to support his “release of facts,” nor was there any opportunity for it to be challenged. While Gormly declared that what he presented was only his “current interpretation,” nevertheless his comments will stand as the only official statement until the inquest resumes, which could well be months away.
Gormly’s “release of facts” dealt solely with two discrete episodes—the start of the siege after Monis entered the cafe in central Sydney at 8.33 a.m. on December 15 and its tragic conclusion when police stormed the premises in the early hours of December 16. While providing some details, the account was chiefly significant for what it excluded.
Gormly shed no light on Monis’s extensive contact with police and intelligence agencies prior to the siege, whether he was being monitored, or if he had been identified on any of the many cameras that monitor Martin Place where the cafe is located. Monis had previously protested outside the Martin Place studios of Channel Seven, which beefed up its security in response.
The 50-year-old Monis was an erratic and unstable individual—an Iranian refugee and self-proclaimed Shiite cleric who faced charges over allegations of sexual assault and assisting the murder of his ex-wife. Gormly said the coronial inquiry will seek a psychiatric assessment of Monis, as well as delve into other aspects of his life.
According to Gormly’s account, Monis was in the cafe for at least half an hour before telling the manager to lock the doors. He pulled out a sawn-off shotgun, ordered staff and customers against a wall and told them to display a flag with Arabic script, which was not that of the Islamic State of Iraq and Syria (ISIS). At 9.44 a.m., he instructed Tori Johnson to ring the emergency 000 number and tell the operator that he and others had been taken hostage in the Lindt cafe, radio-controlled bombs had been placed in three city locations and that Australia was under attack by ISIS. The claims about the bombs were false, as were those about ISIS .
Within minutes, police and the paramilitary Tactical Response Unit were on the scene. Gormly made no mention of the fact that high-level decisions were taken to elevate the situation into a major national crisis. Around 10 a.m., Prime Minister Tony Abbott and the cabinet national security committee met and in league with the state government in New South Wales, set in motion a massive police operation that sealed off much of central Sydney.
The 000 call, which had not previously been reported to the public, lasted 12 minutes, yet no further details were released yesterday. Did Monis identify himself? Did he issue any demands? As it turned out later, after the siege was over, Monis issued very limited demands—an ISIS flag, an acknowledgement that the siege was an ISIS attack and a phone call with Abbott. Yet these demands were deliberately ignored.
Gormly’s account appears to be scripted to justify the transformation of what was a serious, but relatively straightforward police matter into a “terrorist” crisis—all in a very short time-frame. Yet as Gormly acknowledged, “it seems he [Monis] had not established any contact with Islamic State”—a fact that would have been known to Australian intelligence agencies.
The Abbott government, supported by the Labor opposition and a compliant media, seized on cafe standoff to create an atmosphere of uncertainty and fear that fed into its “war on terror” agenda of supporting the US-led war in the Middle East and ramming through a battery of draconian anti-terror laws.
Gormly’s description of the end of the siege around 2 a.m. on December 16 was likewise carefully tailored. He provided graphic details of Monis’s execution-style killing of Tori Johnson, which was widely circulated in today’s establishment media. However, what prompted the shooting was the increasingly desperate situation inside the cafe that had been created by the refusal of state and federal governments to negotiate on any of Monis’s demands.
The authorities insisted that the media suppress all news about Monis and his demands, no doubt concerned that public pressure for negotiations could mount. Inside the cafe, the hostages were frantically trying to get the message out, with one appealing to “send the fricking Islamic flag.” Gormly revealed that he would have to sift through over three hundred 000 calls, as well as many emails, Facebook pages and other social media. Just before Johnson’s murder, a third batch of hostages made a desperate escape by breaking down a door.
The decision not to negotiate with Monis and to block all media coverage of his demands is likely to remain shrouded in secrecy. Gormly indicated that there would be an examination of the police management of the siege, but foreshadowed that “we will have to bear in mind that public exposure of details of plans of that type can themselves involve security issues. That evidence may require special treatment.” The role of political actors such as Abbott will remain well outside the bounds of the inquiry.
The police storming of the cafe resulted in the deaths of Monis and Katrina Dawson, as well as the injury of three other hostages and a member of the police paramilitary assault team. Monis died in a hail of bullets, including two to the head. Dawson was hit by six police bullets or fragments of bullets, one of which severed a major blood vessel. All the other injuries were caused by police bullets.
Once they get underway, the coronial inquiry’s proceedings are likely to reveal more details of the events surrounding the Sydney siege. However, one can predict in advance that the inquest will avoid any examination of the manner in which the Abbott government and the establishment as a whole exploited the siege for reactionary political purposes and the impact of their decisions on its outcome.

Peruvian government repeals law targeting young workers

Armando Cruz

Almost two weeks after thousands of young workers and students marched to protest Peru’s new “Youth Labor Law,” President Ollanta Humala summoned an extraordinary session of the country’s Congress in order to debate the viability of the legislation.
The law was repealed in a landslide vote January 26—in time to preempt another demonstration called for Thursday—with many of the original congressmen who voted for it changing their positions, obviously because of the unexpected mass opposition.
Passed into law late last year, the legislation was cynically promoted as a means to encourage the hiring of young workers by small enterprises, through the slashing of benefits to reduce labor costs for the employer. In reality, it was part of a series of economic packages passed last year to make the working class pay for the deceleration of the Peruvian economy.
A recent investigation by the Peruvian daily La República shed some light on the intervention of the employers’ associations in the drafting of the bill. In October 2014, the Exporters Association (Asociación de Exportadores, ADEX) presented a presentation to the government Labor Commission entitled: “The Reforms that Peru Needs.”
“In the presentation,” the report states, “ADEX proposes the reform of the general labor regime (...) reducing vacations, gratuities, compensations and the facilitation of firings.”
The successive marches against the bill were met with a rising crescendo of state violence, along with a campaign of intimidation by the government and alleged infiltration by agents provocateurs. Minister of the Interior Daniel Urresti proposed asking for IDs for anyone participating in one of the early marches.
Weeks later, some 20 activists received a “preventive complaint” by an attorney warning them beforehand against engaging in the promotion of the protests. And during the preparations for the fourth march, gun-toting policemen detained young activists from the district of San Juan de Lurigancho for handing out leaflets promoting the march.
The marches have been organized and led by radical youth collectives with no significant association to established “left” parties. There has also been a qualitative increase in the self-organization of young activists who, through the use of social media, divided the city into 12 “zones” in order to organize the protest’s agenda and route. The “zones” have also become forums for discussion and activism in the district neighborhoods, without the active initiative of either the unions or the pseudo-left. This practice has also spread outside the capital.
Sensing the ruling elite’s concern that this movement could not be contained, the unions and pseudo-left parties decided to lead the last march on January 15. However, the young demonstrators accused the General Confederation of Unions of Peru (Confederación General de Trabajadores del Peru, CGTP) of betraying the main goal of the march: to demonstrate pacifically in front of the Congress.
“The CGTP agreed to ensure the defense of 10,000 workers as they led the protest along Abancay Avenue (which leads to Congress),” wrote activist César Cornejo. But at the moment of reaching the avenue, he charged, “the few unions then wrapped their flags and left. A small police provocation was staged by the CTP and Renovar (the union and collective of the right-wing APRA party, respectively) and the repression was unleashed on students who were occupying most of the street.”
The protesters were dispersed through downtown Lima, pursued by policemen firing tear gas and beating young workers who fought back.
“We couldn’t go to Congress because the unions who were supposed to ensure our safety abandoned us,” stated Cornejo.
With polls showing nearly 70 percent of the population rejecting the youth labor bill, media spokesmen from the Peruvian right called for the law’s repeal. They fear that the unexpected youth radicalization may jeopardize the prospects for the election of a right-wing, pro-business candidate in next year’s presidential elections. Expected to run are APRA’s Alan Garcia, the fujimorista Keiko Fujimori and the multi-millionaire American-Peruvian banker Pedro Pablo Kuczynski. All these big-business-supported politicians have feigned, in varying degrees, opposition to the law.
The repealing of the law is a defeat for Humala, who already suffered from an approval rating of just 25 percent. Not only did seven of his Gana Peru party’s congressmen fail to obey the party line, voting to repeal the legislation, the resignation of one congressman from its ranks has left Gana Peru with just 34 of the 130 seats in Congress, one less than the right-wing fujimorista opposition party, Fuerza Popular.
As his government enters its last year in power, the Peruvian bourgeois media is speculating over whether the population’s loss of confidence in Humala—elected in a distorted expression of popular rejection of the “neoliberal” policies of his predecessors—will evolve into a further radicalization of the working class and youth, or whether popular discontent can be channeled behind a pro-business candidate, as they clearly hope.

Court sentences two Chileans, indicts US in the 1973 murder of Charles Horman

Bill Auken

More than four decades after two young US citizens were brutally tortured and murdered, along with thousands of Chilean workers, students and political activists, a court in Chile has sentenced two former military intelligence officers in connection with the crime, while directly indicting the US government for setting it into motion.
Pedro Espinoza, a retired Chilean army brigadier general, was sentenced to seven years in prison in connection with the executions of Charles Horman, 31, and Frank Teruggi, 24, in the days following the September 11, 1973 US-backed military coup that overthrew the government of Socialist Party President Salvador Allende. Rafael Gonzalez, a Chilean air force intelligence operative, was sentenced to two years of police supervision for being an accomplice in the killing of Horman.
The Horman case was made famous by the book The Execution of Charles Horman: An American Sacrifice, written in 1978 by Thomas Hauser in cooperation with Horman’s widow, Joyce, and father, Ed Horman. The book was subsequently the basis of the award-winning 1982 movie Missing, directed by Costa-Gavras.
Espinoza was the second-in-command of DINA, the Chilean secret police, and was named as the “material author” of the crime. He was already imprisoned for numerous other political murders, including that of the exiled former Socialist Party foreign minister of Chile, Orlando Letelier, who was killed in a terrorist car bombing in Washington, DC in 1976. He has also been condemned to life in prison by a court in Paris for the killing of four French citizens.
Gonzalez played an intimate role in the case, apparently spying on Horman and Teruggi—who were both politically sympathetic to the Allende government and collaborated in editing a left-wing weekly news digest known as “FIN”—and then interrogating Horman after soldiers abducted him from his home in Santiago on September 17, 1973.
Horman was executed the next day after suffering brutal torture. Frank Teruggi was arrested on September 20 and taken to the Santiago National Stadium, which was turned into a giant concentration camp through which some 40,000 perceived enemies of the military junta were to pass. Like many of them, Teruggi was tortured and killed within a day of being taken there.
Defecting the year after the coup and seeking asylum in the Italian embassy, Gonzalez recounted that he was present when the decision was made at the Chilean Ministry of Defense to execute Horman. Also present, he said, was General Augusto Lutz, director of the Military Intelligence Service (SIM), a Chilean colonel and an unidentified US official, believed to be with the CIA.
Before his defection, Gonzalez was assigned by the Chilean junta to serve as the liaison with US officials over the Horman case. When the regime decided to exchange Horman’s body for US military aid to the Chilean armed services, it was Gonzalez who knew where to find it.
The Chilean court’s 276-page ruling, which the New York Times reported was issued on January 9 but only made public on Wednesday, makes it clear that the US government was fully complicit in the 1973 executions of the two Americans.
The murders of both Horman and Teruggi, the ruling states, were the outcome of a “secret investigation” into their political activities carried out by the United States Military Group in Santiago, commanded by Navy Capt. Ray E. Davis. The intelligence gathered by the US military was passed along to its Chilean counterparts in what was effectively a warrant for their deaths.
Davis actually was indicted by a Chilean court in 2011, and his extradition sought from the US. Only later was it learned that he had been checked into a nursing home in Chile, where he died in 2013.
Chilean Judge Jorge Zepeda issued a ruling last year in which he found that “The military intelligence services of the United States had a fundamental role in the creation of the murders of the two American citizens in 1973, providing Chilean military officers with the information that led to their deaths.” The judge found that the executions were part of “a secret United States information-gathering operation carried out by the US Milgroup in Chile on the political activities of American citizens in the United States and Chile.”
For over two decades successive US government denied any participation in or even knowledge of what happened to Horman and Teruggi. Then, in 1999, a 1976 secret State Department memo was declassified. It declared that the Horman case “remains bothersome,” noting growing “intimations” of “negligence on our part, or worse, complicity in Horman’s death.” The memo noted that, while its focus was on Horman, “the same applies to the case of Frank Teruggi.”
While insisting that the State Department’s duty was “categorically to refute such innuendos in defense of US officials,” it added that given what information was at hand, it was not in a position to do so.
It continued that based on this information, the department was “persuaded” that “The GOC [Government of Chile] sought Horman and felt threatened enough to order his immediate execution.” It added that the Chilean regime “might have believed that this American could be killed without negative fallout from the USG [US Government].”
The memo acknowledged that there existed “some circumstantial evidence to suggest US intelligence may have played an unfortunate part in Horman’s death.” And finally, it cited Rafael Gonzalez, the recently sentenced ex-Chilean air force intelligence agent who handled the State Department’s inquiries at the time, as stating that, “Horman was considered as knowing too much.”
What Horman apparently knew too much about was the direct US role in orchestrating the Chilean military coup. At the start of the coup, he had been in the Chilean resort town of Viña del Mar, near the Pacific port city of Valparaiso, which served at the time as the base of operations both for Chile’s military in launching the coup, and US warships and military and intelligence personnel sent to help organize it. Horman spoke with US operatives who happily took credit for the coup, and he took notes documenting these discussions.
Also present in Viña del Mar was Captain Davis, the head of the US Milgroup, who ended up driving Horman and a companion back to Santiago at the height of the military siege, when a curfew was in effect and roads were blocked by military checkpoints. Horman’s widow recounted that he was conscious of the US officer’s interrogating him during the drive and, before it was over, “began to fear Captain Davis.”
The Horman family, represented by the Center for Constitutional Rights, brought a lawsuit against former national security adviser and Secretary of State Henry Kissinger and other US officials for the wrongful death of Charles Horman. Kissinger, who played the leading role in preparing the coup, addressed a message to Chilean dictator Gen. Augusto Pinochet at the height of the bloodbath in which Horman and Teruggi were killed, praising him for his “great service to the West.” The suit was ultimately dismissed because of the US government’s withholding of secret documents and witnesses.
In response to the latest sentencing of the two Chileans for their role in the killings in 1973, Frank Teruggi’s sister, Janis Teruggi Page, told the Times, “Frank, a charitable and peace-loving young man, was the victim of a calculated crime by the Chilean military, but the question of US complicity remains yet to be answered.”

Germany moves into deflation as global bond prices point to deepening slump

Nick Beams

The German economy has slipped into deflation for the first time since 2009, in another indication of the deepening recessionary trends across the euro zone.
Preliminary figures issued by the Federal Statistics Office yesterday showed that consumer prices fell by 0.3 percent in December from a year earlier. The office said that when the results were harmonised with figures from Eurostat for the whole euro zone, to be released today, the decline will be 0.5 percent.
While the drop in oil prices was a key factor, so-called core inflation, which strips out energy and food, is believed to have fallen.
Prices had been expected to show a decline, but the rate of decrease was greater than expected. Economic analysts are predicting that Germany will remain in deflation at least until the end of the year.
German Commerzbank chief economist Jörg Kramer commented: “[E]xpectations for eurozone inflation now carry a decidedly downside risk. The drop in oil prices suggests that the headline inflation should stay below zero until autumn.”
Earlier this month, the European Central Bank (ECB) announced a program of quantitative easing, involving the purchase of €60 billion worth of government bonds per month until at least September. The ECB said this was needed to meet its mandate to keep inflation near to, but below, 2 percent per annum. That target looks further away than ever.
The official fear of deflation flows from its financial impact, in particular on debt. Every fall in prices increases the real level of debt burdens, choking off investment and worsening the economic downturn.
The euro zone has yet to return to output levels it reached in 2007, with investment well down on pre-global financial crisis figures. The depressed character of the real economy is reflected most clearly in financial markets.
With profitable outlets in the real economy shrinking, money is being poured into bond markets, driving up prices and lowering yields to historic lows. The price of a bond, which brings a fixed annual return, and the yield or interest rate, calculated on the basis of its market value, stand in an inverse relationship to each other.
Yesterday, the yield or effective interest rate on the benchmark UK 10-year bond touched a low of 1.396 percent during morning trade. This was lower than at the worst point of the euro zone crisis in 2012 and the first time in history that it had gone below 1.4 percent. The yield on 30-year bonds also dropped to a record low of 2.102 percent.
The fall in bond yields reflects the outlook in financial markets that there is going to be no economic recovery and that the only way of accumulating profits is through ever-more parasitic forms of speculation.
There has been a flood of money into bond markets, seeking both a safe haven for cash and the opportunity to make money out of the bond-buying programs of the ECB and other central banks. As a result, interest rates have effectively turned negative in a number of markets.
“People tend to think of this as a European and Japanese issue but the move down in yields is a global trend. That increases your worry that economies are not responding to all this stimulus,” Citigroup chief economist Matt Kind told the Financial Times.
The newspaper noted the striking pace at which the “negative universe” is expanding. “Some €1.5 trillion of euro zone bonds with a maturity of more than one year—almost a quarter of the total—yield less than zero, according to JPMorgan’s calculations,” it reported. “Yields are also negative on Swiss and Japanese bonds.”
At first sight the phenomenon of negative yields appears to be a contradiction in terms because every bond brings a fixed amount paid by the issuing government at regular intervals, decided on when the bond was issued. At the end of the bond’s term, the government pays back to the holder its face value.
But before they come to maturity, bonds are traded in financial markets because of the income stream attached to them. They can be bought and sold above their face value.
Consequently, the price of the bond may rise so high in the market that it exceeds its face value and the amount of interest payments made on it, hence bringing a negative rate of return.
It would seem, therefore, that there is no reason for making such investments. However, if bonds are purchased in the belief that their price will rise still further in the market, not least because of the bond-buying operations of central banks, then they can be bought and sold at a profit.
Furthermore, the rapid movement in currency values over the recent period means that vast profits can be made by getting on the right side of such shifts. As the Economist magazine recently noted, “international investors who bought Swiss bonds before the Swiss franc’s recent jump [against the euro] will have made a killing.”
The falling bond yields and the emergence of negative interest rates point to the enormous pressure generated by financial markets for the supply of cheap money to continue to flow from central banks.
If this supply stops and there is any return to what were once considered “normal” conditions, then the process of buying bonds at elevated prices in the expectation that they will keep rising will come to a shuddering halt. The potential consequences threaten to outweigh even those of the 2008 financial crisis.
Meanwhile, in the absence of any profitable outlets for investment in the real economy, the phenomenon of parasitism on steroids continues—an indication of the ongoing breakdown of the global capitalist economy.
Alan Ruskin, a strategist at Deutsche Bank, told the Financial Times: “It was less than a year ago that negative interest rates were still largely a footnote in a dog-eared history book about 1970s Swiss monetary policy. Either bonds are mispriced and large losses loom for investors, or we have a big problem on our hands.”

Six million hit with Obamacare penalties for being uninsured

Jerry White

An estimated six million people will have to pay a penalty under the Affordable Care Act (ACA) for not having medical insurance in 2014, according to federal tax projections released Wednesday.
Under the law, popularly known as Obamacare, individuals and families who are not insured through their employer or a government program such as Medicare or Medicaid must purchase insurance from private companies or pay a fee on their federal income taxes for each month they go without coverage.
The penalty, called an Individual Shared Responsibly Payment, is a minimum of $95 for individuals but can be one percent of family income—potentially hundreds of dollars—if a dependent is not covered. The Treasury Department figures mean that between two and four percent of all taxpayers in the United States lacked medical coverage for all or part of the year and did not qualify for one of the exemptions from the so-called individual mandate.
Another 10 to 20 percent of taxpayers—or 15 million to 30 million people—were uninsured but will qualify for an exemption. The latter includes those whose incomes are so low that even the cheapest coverage would eat up eight percent of household income—defined by the government as “unaffordable” health care—or suffer from other hardships, such as homelessness, utility shutoffs, personal bankruptcy or the death of a close family member.
The penalties are nevertheless hitting wide sections of working people who cannot afford rising health care costs under conditions of stagnating wages and precarious employment. In a section on its web site, entitled “The Tax Penalty and the $95 Myth,” tax preparer Jackson Hewitt gave the example of an unemployed, uninsured 27-year-old moving back with her parents and two younger siblings for financial reasons. Even if everyone else in the household were insured, the family would have to pay a one percent penalty if the 27-year-old child could not sign up for minimal coverage. “If this family had an income of $68,000, the annual penalty would be $477, which is more than five times the $95 minimum!”
The tax figures, which indicate that up to 36 million people are still without insurance in the US, further exposes the fraud of Obamacare, which was presented as a means of providing near-universal, affordable health care for millions of Americans.
In fact the scheme has been a boondoggle for private insurance companies who have gained a captive customer base forced to buy insurance on the ACA “marketplace.”
According to the Obama administration estimates, which were adjusted downward after initially overinflated numbers, 6.7 million people received care through insurance purchased on private exchanges last year, just slightly above the number penalized for being uninsured. Officials claim that 9.6 million people have signed up for 2015 exchange plans, with two weeks left to enroll.
Nearly 90 percent qualified for some type of government subsidy due to income thresholds, in what is essentially a transfer of public money to private insurers. Even these individuals and families could be penalized this tax season.
If they incorrectly predicted their income last year, or if their income levels or family size changed, individuals could be forced to pay back some or all of their credits, up to $600. Mark Mazur, assistant secretary for tax policy at the Treasury Department, did not provide an estimate of how many of the 4.5 to 7.5 million recipients could lose their tax refunds or even still owe the IRS money.
Obamacare has added a series of new forms, check-off boxes and exemptions to the already convoluted and confusing process. The Hill reported that HealthCare.gov CEO Kevin Counihan is launching an effort to educate consumers with nonprofit groups and most major tax preparers. “Our goal, fundamentally, is to get people insured,” Counihan told reporters. “Our goal is not to get fee income [from penalties] or to make this difficult for folks.”
The federal figures show the overwhelming number of taxpayers—nearly 75 percent, or 112.5 million people—received coverage all year through their jobs. A major aim of Obama’s so-called health care “reform” is to provide corporations with an incentive to reduce medical coverage for their employees and force workers to pay more out-of-cost expenses for inferior care.
By 2018, a so-called Cadillac Tax will go into effect, which will subject higher quality employer-sponsored insurance plans to a 40 percent excise tax on benefits in excess of $10,200 for an individual and $27,500 for a family plan.
The issue is central in the labor agreement involving 30,000 oil industry workers, which expires on January 31. Pointing to the fall in oil prices, incredibly profitable companies like BP, Chevron Phillips, Exxon and others are pressing for higher monthly health care premiums, deductibles and out-of-pocket expenses.
Last year a survey of large corporations found that only a quarter of big firms said they were confident they would still be offering health care coverage by 2025. The results were the lowest percentage in the two-decade history of the survey conducted by Towers Watson and the National Business Group on Health.
Another study found that ACA will save US businesses $3.25 trillion through 2025, largely through ending employer-sponsored health care and shifting health insurance costs to workers and their families. Research from S&P Capital IQ Global Markets Intelligence (GMI), a financial information division of Standard & Poor’s, found that the “ACA presents an opportunity for US companies to radically redefine the role they play in the health care system.”
Obamacare has also been a boost to the drive by the corporate elite to transform the working class into an atomized, highly exploited workforce in the so-called “1099 economy.” This is named after the tax form used to denote workers not as “employees” but “independent contractors” who are not eligible for health benefits, unemployment insurance, worker’s compensation or retirement plans.
A recent front-page feature in the Economist, entitled “Workers on Tap,” praised companies like Uber, a smartphone app-based start up company that “hires” non-professional drivers, using their own cars and fuel, to pick up and transport customers. The workers only work when needed and have no health care or any other benefits.
The magazine hails this trend, writing, “Like mass production, it has profound implications for everything from the organization of work to the nature of the social contract in a capitalist society… Too much of the welfare state is delivered through employers, especially pensions and health care: both should be tied to the individual and made portable, one area where Obamacare was a big step forward.”

German president uses Auschwitz commemoration to justify militarism

Ulrich Rippert

On the occasion of the 70th anniversary of the liberation of the Auschwitz concentration camp by Soviet troops, German President Joachim Gauck made a commemorative speech on Tuesday in parliament. The sermonizing tone of the former East German clergyman was difficult to bear. But even worse was the cynicism with which Gauck used the Holocaust memorial day to legitimise the reemergence of German militarism.
The key promise after Auschwitz was “never again,” Gauck said, before responding, “but what is it worth?” He cited the German-Jewish jurist Thomas Buergenthal, who as an eleven-year-old just survived the death march at Auschwitz, before emigrating to the United States and working as a judge at the International Court of Justice.
Ten years ago, on the occasion of the 60th anniversary of the liberation of the Sachsenhausen concentration camp, Buergenthal declared that the expression “never again” didn’t amount to much. “Were there not the genocide in Cambodia, Rwanda and Darfur?” Gauck quoted Buergenthal, and Gauck added “were there not Srebrenica and today Syria and Iraq?”
“Even if here the crimes did and do not approach the dimensions of National Socialist mass murder,” Gauck went on, it was nevertheless terribly discouraging when, as Buergenthal said, genocide and mass murder have become almost routine, when the world declares “never again,” but closes its eyes in the face of the next genocide.
A year ago, Gauck announced the end of German military restraint at the Munich Security Conference and posed the question, “Do we Germans concern ourselves so intensively with our past because we are looking for an excuse to remain outside of the problems and the conflicts in the world today?”
On Tuesday, he posed the same question but in a different form: “Are we then ready and able for prevention, so that it never even gets to the point of mass murder? Are we at all in a position to halt these kinds of crimes and to punish them? Is the desire sometimes lacking to intervene against such crimes against humanity?”
Gauck’s demagogy in support of war follows a well-trodden and bizarre logic. Like no other country, Germany has experienced the crimes of fascism and the Holocaust. It was liberated by external military intervention. It established a stable democracy in the post-war years and must now rearm its military and intervene militarily everywhere in the name of human rights.
Gauck is using the terrible past crimes of German imperialism to prepare similar crimes in the future. His pious moralising plays an important role. He speaks about the Holocaust entirely separate from any political or historical context, as if evil suddenly overwhelmed ordinary people. His argumentation remains on the lowest level, never going beyond moral disgust at the incomprehensible depth of evil.
In the postwar period, the German population had not been willing to engage with the crimes of the Nazi era, said Gauck, failing to mention that the government of Konrad Adenauer was full of old Nazis and that at every level of society in West Germany, in business, politics, media, judiciary and universities, Nazi circles were in control.
Instead, Gauck pinned the blame on the ordinary people. Although Hannah Arendt had published her book on the “banality of evil” very early on, he said, it was only later that the culpability of the ordinary citizen, who had committed themselves to a criminal führer and refused to take any responsibility for the consequences, was examined.
It had taken some time before the Germans began to accept, Gauck said, “that it was entirely normal men and women who lost their humanity, their consciousness and their morals, often people from the local neighbourhood, or even people from the same family.”
Gauck repeated such arguments in order to deny any connection between fascism and capitalism.
In order for the Nazis to be able to carry out their murderous anti-Semitism, a whole series of major societal changes were necessary. The most important were the destruction of the organised workers movement, which in Germany, in particular, formed a massive bulwark against anti-Semitism and war, and the beginning of the war of extermination against the Soviet Union.
It was once well-known among politically educated and class conscious people that the rise of European fascism after the First World War was a direct response by the capitalist order to the revolutionary danger of the socialist mass movement of workers which threatened it.
Mussolini in Italy, Hitler in Germany and Franco in Spain mobilised the enraged middle class against the socialist workers movement. In this, anti-Semitism proved an effective means, just as the agitation against Muslims does today.
With the deepening of social tensions, in particular after the stock market crash of 1929, support for fascism within the ruling elite grew. Hitler did not have to violently seize power—it was handed to him by the highest level of the state, business and military in January 1933. Two months later, all of the bourgeois parties voted for a law giving Hitler emergency powers. The Communist Party, the Social Democratic Party and the trade unions were destroyed.
In contrast to Gauck’s disparaging talk of the “ordinary man,” it remains an historical fact that the workers movement in the 1930s opposed the rise of Hitler. This is not changed by the fact that the KPD, SPD and trade union leadership utterly failed, demobilised the working class with a false policy and thereby made it possible for Hitler to take power without a mass movement opposing him.
In the final analysis, the Holocaust was the price that the Jewish population and the whole of humanity paid for the failure of the working class to overthrow capitalism.
But even after the Nazis had the reins of state power firmly in their grasp, they were not in fact able to impose their murderous fantasies unhindered. For that, the world war was necessary. The extermination of the Jews merged with the war of extermination in the east, which aimed to physically eliminate the political and intellectual leadership of the Soviet Union so as to secure German dominance for centuries. The cold-blooded murder of six million Jews was the high point of a campaign of extermination in which millions of Communists, partisans, intellectuals and ordinary people were killed in Poland, throughout eastern Europe and in the Soviet Union.
With its offensive against Russia in Ukraine, where it is collaborating closely with former allies of the Nazis, German imperialism is today setting out on the same course. The same is true of the Middle East and Africa, where Berlin is backing ever more openly criminal wars under the pretext of humanitarian intervention. Gauck’s cynical attempt to justify the reemergence of German imperialism with the slogan “never again another Auschwitz” must be decisively rejected.

EU foreign ministers toughen sanctions against Russia

Johannes Stern

At yesterday’s meeting of EU foreign ministers in Brussels, the European Union avoided an open conflict over its aggressive course towards Russia and further toughened economic sanctions. The new Greek government under Alexis Tsipras, which had questioned the sanctions policy before the special summit, agreed to the new measures.
The decision will continue the existing travel bans and bank account freezes affecting 132 people and 28 organizations until at least September. In addition, other persons, alleged pro-Russian separatists in Ukraine and their supporters, will face similar measures. A further tightening of economic sanctions was not initially agreed. However, the ministers threatened to take the action should the situation in the disputed territories in eastern Ukraine worsen.
A final decision is not expected until a meeting of heads of state and government on February 12. “If there is an offensive towards Mariupol or other regions, one will need to respond with clear and harsher measures,” threatened German Foreign Minister Frank-Walter Steinmeier, a member of the Social Democratic Party.
Ahead of the meeting, the EU heads of state had threatened Russia with harsher sanctions. In a statement earlier this week, they called for the foreign ministers, “given the deteriorating situation” in Ukraine, “to assess the situation and to take appropriate actions into account, in particular further restrictive measures.”
In the same letter, the European leaders condemned “the killing of civilians by the indiscriminate shelling of the Ukrainian city of Mariupol” last weekend, and the supposed “continuing and growing support” of Russia for the separatists in eastern Ukraine.
The American government is singing the same tune. “As long as Russia, with its blatant disregard of its obligations, continues [...], the costs for Russia will continue to rise,” Vice President Joe Biden said on Wednesday in a telephone conversation with the President of Ukraine Petro Poroshenko.
While the Western powers criticise Russia for its alleged involvement in Ukraine, they are simultaneously expanding their economic and military support for the pro-Western regime in Kiev, which is conducting a brutal war against the population in eastern Ukraine.
Following a phone call with German Chancellor Angela Merkel, President Barack Obama held out the prospect of a further aid package for Ukraine. In the spring, the US Army plans to send trainers to western Ukraine to work with the Ukrainian National Guard, which is riddled with fascist elements. Obama recently signed into law the so-called Ukraine Freedom Support Act allowing the United States to supply heavy weapons to the Ukrainian government and to impose additional sanctions against Russia.
Despite the concerted offensive, the issue of further economic war measures against Russia is giving rise to increasing conflicts within and between European governments.
Prior to the meeting on Thursday, the German Vice Chancellor Sigmar Gabriel spoke out against tightening the sanctions. “At this stage it is too early, I think, to call for further sanctions,” the SPD chairman told the ZDF broadcast “What now?” Even in the most difficult times we should “not abandon European Russia and just say, now it’s a new Cold War for 30 years.”
Along with the US, the German government has played a leading role in the installation of the pro-Western Poroshenko regime in Ukraine, but it fears a complete breakdown of political and economic relations with Russia.
Nevertheless, Gabriel still threatened the government in Moscow. If Putin tried to link the separatist region to Crimea, that would be “such an escalation by the separatists, supported by Russia, that we cannot just sit and watch.” At the same time, Gabriel warned the new Greek government against adopting a unilateral orientation towards Moscow and departing from the previous line of the EU. “The stupidest thing we could do is to be divided among ourselves,” he warned.
The new Greek government and its foreign minister Nikos Kotzias had initially sharply criticized the statement by the EU leaders. He said Greece had not been consulted and it did not coincide with Greek interests. Due to close economic ties and cultural affinities with Russia, Greece rejected tougher sanctions against Russia, he said.
The growing tensions over the course against Moscow reflect the sharp political and economic crisis in Europe. The catastrophic social impact of the austerity measures, especially in southern Europe, and the EU’s increasingly militaristic foreign policy is fueling tensions within the alliance and between the European states.
Rather than expressing any fundamental disagreement between the EU and the new Greek government, the harsh rhetoric is being used to find a common course. While the EU is forcing Tsipras to share in the official austerity policies and the confrontation with Russia, he has suggested certain changes in the official policy in order to get the crisis under control, and insists again and again he wants to “save” the EU.
In parallel with the foreign ministers’ meeting, the European Parliament President Martin Schulz travelled to meet with Tsipras to Athens. The social democrat warned the new Greek government against taking unilateral political action. They had not been elected to boycott sanctions against Russia, he said on German television before his trip. He added arrogantly, “I have no desire to conduct ideological debates with a government that is barely two days in office. What we need are pragmatic solutions, which I will propose to him.”
The European Central Bank (ECB) also warned the Greek government not to deviate from the existing course. “Greece must continue to play by the rules,” ECB director Benoit Coeure said in an interview on Thursday with the Italian newspaper Corriere della Sera. “All decisions can have only one goal, namely to continue with the reforms in Greece,” he explained. Even with a new government, nothing will change the fact that Greece needs further reforms, he said.
Although Coeure said that Europe accepts the political change in Athens, he added that the ECB cannot make any contribution when it comes to a possible lessening of Greece’s debt burden. The term of the Greek government bonds, which where purchased from the country’s central bank, could not be extended. “That would be like giving a loan to Greece and the contracts prohibit it,” he said.
The hard line of the high-ranking EU representative not only speaks volumes about the essentially dictatorial character of the EU, but also about the class character of Syriza. The majority of the population rejects the policies austerity and war. However, even following the elections in Greece, Tsipras will continued these policies in close cooperation with his right-wing coalition partners the Independent Greeks.

Income inequality soars in every US state

Andre Damon

Income inequality has grown in every state in the US in recent decades, according to a new study published this week by the Economic Policy Institute. The report, entitled The Increasingly Unequal States of America, found that, even though states home to major metropolitan financial centers such as New York, Chicago, and the Bay Area had the highest levels of income inequality, the gap between the rich and the poor has increased in every region of the country.
“It doesn’t matter if you’re looking at Hawaii or West Virginia or New York or California, there has been a dramatic shift in income towards the top,” said Mark Price, an economist at the Keystone Research Center in Harrisburg, Pennsylvania, and one of the study’s co-authors, in a telephone interview.

Source: Economic Policy Institute

The report noted that between 2009 and 2012, the top one percent of income earners captured 105 percent of all income gains in the United States. This was possible because during this period the average income of the bottom 99 percent shrank, while the average income of the top one percent increased by 36.8 percent.
To varying degrees, this phenomenon was expressed throughout the country. In only two states did the income of the top one percent grow by less than fifteen percent.
The enormous concentration of wealth in the top 1 percent was even further concentrated in the top .01 percent. In New York, for instance, someone had to make $506,051 per year to be counted in the top one percent, but $16 million to be in the top .10 percent. The average income within the top .01 percent in New York was a staggering $69 million.
“Most of what’s driving income growth are executives in the financial sector, as well as top managers throughout major corporations,” said Dr. Price. “Those two together are the commanding heights of income in this economy.”
Dr. Price and his co-author, Estelle Sommeiller, based their study on the methods of Thomas Piketty and Emmanuel Saez, whose widely-cited research analyzed the growth of income inequality for the United States as a whole. Using state-by-state data from the Internal Revenue Service, much of which had to be compiled from paper archives dating back almost a century, Price and Sommeiller were able to make a state-by-state analysis of income inequality since 1917.
Nationwide, the average income of the top one percent of income earners is 29 times higher than the average income of the bottom 99 percent. But in New York and Connecticut, the average income in the top 1 percent is 48.4 amd 51.0 times higher than the average for the rest of earners, respectively.
New York City is the home of Wall Street and boasts more billionaires than any other city in the world. Connecticut is home to many of the largest hedge funds in the world. Ray Dalio, the founder of Westport, Connecticut-based hedge fund Bridgewater Associates, earned $3 billion in 2011 alone.
While the average income of the bottom 99 percent of income earners in New York state was $44,049, the average income of the top one percent was $2,130,743. For the United States as a whole, the top one percent earned on average $1,303,198, compared to an average income of $43,713 for the bottom 99 percent.
In California, the most populous US state, the top one percent received an average income of $1,598,161, which was 34.9 times higher than the average pay of the bottom 99 percent. In 2013, four of the highest-paid CEOs in the United States were employed by technology companies, which are disproportionately located in California. At the top of the list was Oracle CEO Larry Ellison, with a current net worth of $53.4 billion, who made $78 million in pay that year.
The study shows that the average income for the bottom 99 percent of income earners is relatively consistent across states, with no state showing an average income more than 33 percent above or below the average for the whole country.
The average incomes of the top one percent varied widely, however: from $537,989 for West Virginia to $2.1 million in New York. According to Forbes, the wealthiest resident of West Virginia is coal magnate Jim Justice II, who, with a net worth of $1.6 billion, is the state’s only billionaire. New York City, by contrast, has four residents worth more than $20 billion, including chemical tycoon David Koch, with a net worth of $36 billion; former Mayor Michael Bloomberg, with a net worth of $31 billion; and financiers Carl Icahn and George Soros, worth $20 billion apiece.
Yet despite the broad disparity in the relative concentration of the ultra-rich, every single state showed a pronounced and growing chasm between the wealthy few and the great majority of society. In Alaska, which has relatively high wages and few billionaires, the incomes of the top one percent were on average more than fifteen times higher than the bottom 99 percent.
The report noted that exploding CEO pay has set “new norms for top incomes often emulated today by college presidents (as well as college football and basketball coaches), surgeons, lawyers, entertainers, and professional athletes.”
Price added, “As the incomes of CEOs and financiers are rising, you’re starting to see that pull, almost like a gravity starting to pull up other top incomes in the rest of the economy.
“A University president might claim, ‘I run a big institution, you expect me to raise money from some of the wealthiest people in the country, you’ve got to pay me a salary that helps me socialize with them.’”
Price said that, while inequality figures are not available nationwide on the local level, his work on income inequality in the state of Pennsylvania shows that income inequality is growing in counties throughout the state, in both rural and urban centers.
Nationwide, the income share of the top one percent fell by 13.4 percent between 1928 and 1979, a product of the New Deal and Great Society reforms, as well as higher taxes on top earners. These measures were the outcome of bitter and explosive class struggles. But in subsequent years, that trend has been reversed.
As a result, income inequality in New York State was even higher in 2007 than it was in 1928, during the “roaring 20s” that gave rise to the Great Depression. In the period between 1979 and 2007, every state saw the income share of the top 1 percent grow by at least 25 percent.

Source: Economic Policy Institute

Citing a previous study by the Economic Policy Institute, the report noted that “between 1979 and 2007, had the income of the middle fifth of households grown at the same rate as overall average household income, it would have been $18,897 higher in 2007—27.0 percent higher than it actually was.”
The enormous growth of social inequality is the result of an unrelenting, decades-long campaign against the jobs and living standards of workers. Under the Obama administration, the redistribution of wealth has escalated sharply, through a combination of bank bailouts and “quantitative easing,” which has inflated the assets of the financial elite.
These policies have been pursued by both parties and the entire political establishment, which is squarely under the thumb of the corporate and financial oligarchy that dominates American society.

New Zealand Internet and Mana Parties split following electoral debacle

J. Braddock & T. Peters

In the wake of an abysmal result in last September’s New Zealand election, the Mana and Internet parties agreed to split. The Internet Mana Party (IMP), established last May, was formally dissolved last month. The Internet Party (IP), which was founded shortly before the merger, is “reviewing” its future and may be wound up.
The IMP received just 1.4 percent of the overall party vote, well short of the 5 percent threshold to enter parliament. In a crucial setback, Mana’s leader and sole MP, Hone Harawira, lost his Te Tai Tokerau seat, one of the seven Maori electorates, to Labour.
The overall election result reflected the vast chasm that has opened up, under conditions of sharpening social crisis and preparations for war, between the working class and the entire edifice of official politics. The National Party government and the main opposition Labour Party share essentially the same program of ongoing austerity at home and support for US militarism overseas. Approximately a million people did not vote and Labour received its worst result in 92 years, with just 25 percent of the votes. The immediate beneficiary of the near-record abstention was National, which was re-elected.
Amid the collapse in support for the main parties, the IMP presented itself as an “anti-establishment” alternative. Mana leaders repeatedly declared that they represented “the poor and dispossessed” and called for reforms such as lunches in some schools and a higher minimum wage. The Internet Party criticised the state surveillance agency, the Government Communications Security Bureau (GCSB), and invited journalist Glenn Greenwald and US National Security Agency whistleblower Edward Snowden to address a public meeting five days before the election.
Despite its campaign rhetoric, however, the IMP was an alliance of two capitalist parties, which aimed to enter parliament to prop up a Labour-led government. Like Labour, the IMP did not call for the abolition of the state spying agencies but merely a “review” of their activities. It did not oppose the military and intelligence alliance with the US.
In the lead-up to the election, Mana joined Labour and the right-wing NZ First Party in campaigning against immigration and foreign investment, particularly from China. This xenophobic campaign dovetailed with the push by the Obama administration to strengthen its military alliance with NZ as part of Washington’s “pivot” to Asia: the US military encirclement and preparations for war against China.
Mana’s Maori nationalist platform calls for greater government payouts to indigenous tribal businesses. The IP, founded by the multi-millionaire businessman Kim Dotcom, openly represents an upwardly-mobile layer of young tech entrepreneurs. Dotcom, who had previously donated money to the extreme pro-market ACT Party, called for measures to boost the profits of technology firms like his own. The Internet Party advocated government grants for web-based start-up companies. Dotcom bankrolled the IMP to the tune of $4 million, prompting Harawira to boast that Mana could “no longer be pigeonholed as a party for Maori, the disaffected and for the radical fringe.”
The alliance exposed, in particular, the right-wing character of the pseudo-left groups affiliated to Mana—the International Socialist Organisation (ISO), Fightback and Socialist Aotearoa (SA)—and their integration into the political establishment. All three groups campaigned for the IMP, while leading members of Fightback and SA stood as IMP candidates. They falsely presented Mana as a “left wing” alternative to Labour and National, while justifying its merger with the Internet Party by absurdly claiming that Dotcom had been “radicalised” by the government’s attempts to extradite him to the US on copyright infringement charges.
Following the election defeat, Mana and IP members continued to defend the alliance. Mana’s John Minto blamed the result on the media’s attacks on Dotcom and Labour’s attempts to distance itself from the IMP. He claimed that the merger had “worried the political establishment” because Dotcom’s “massive wealth” gave the IMP the financial resources it needed to challenge “corporate wealth and power.”
Other IMP apologists cynically blamed the working class for the defeat of the so-called “left:” Labour, the Greens and IMP. Martyn Bradbury, who edits the trade union funded Daily Blog, contemptuously declared that New Zealanders rallied to support National’s “mass surveillance and dirty politics.”
Socialist Aotearoa, in a post-election article, declared that the IMP failed to win votes because “the conditions of austerity imposed elsewhere have been avoided” in New Zealand and the working class was not “desperate enough” to support Mana’s “anticapitalist programme.” The ISO similarly implied that the working class is either right-wing or apathetic. It declared that the National government had refrained from major attacks on the working class and “by and large, has succeeded” in portraying Prime Minister John Key as “competent, likeable and popular.”
In reality, Key’s government is reviled by the working class. The near-record abstention in the election demonstrated that there is widespread hostility toward every established party. National has carried out a series of attacks on living standards and public services, including at least 7,000 job cuts, cuts to healthcare, welfare and education and an increase in the consumption tax.
Claims that workers enjoy a comfortable living standard and have not suffered greatly from the economic crisis are false to the core. Throughout the country median incomes declined between 2006 and 2013; in working class South Auckland by over 16 percent. In Northland, part of the Te Tai Tokerau electorate, economist Shamubeel Eaqub has compared economic conditions to those in East Timor, one of the world’s poorest countries.
Despite the IMP’s well-funded and highly visible campaign, and the enthusiastic support it received from the pseudo-lefts, the alliance failed to gain significant support because masses of workers saw it as no alternative to the political establishment. Far from being “anti-capitalist,” Mana represents the Maori bourgeoisie and upper-middle class, a layer that promotes xenophobia and racialist politics in order to divide the working class and advance its own interests. Mana’s alliance with the Internet Party, the creation of a multi-millionaire, was the clearest expression of its pro-business agenda.
The election result—the return of a government committed to austerity and militarism—demonstrates that anger and disgust with capitalist parties is not enough. The working class urgently needs its own party, based on a socialist and internationalist program, to organise the fight against war and for social equality. Building such a party requires a struggle against all those groups, including the ISO, Fightback and Socialist Aotearoa, who seek to shackle workers and youth to right-wing parties like the IMP.

Australian government plunged into leadership crisis by Murdoch intervention

Will Morrow

Amid a deepening economic slowdown in Australia, Prime Minister Tony Abbott’s Liberal-National Coalition government has been thrown into bitter factional turmoil this week, with public speculation by ministers of a potential leadership challenge. The outcome of the Queensland state election today, in which Liberal National Party Premier Campbell Newman is considered to be in danger of losing his own seat, is being regarded as a litmus test for the federal government.
The crisis was set off by the public intervention of global media baron Rupert Murdoch on Wednesday, following Abbott’s announcement on January 26 that he had bestowed an Australia Day knighthood on 93-year-old Prince Phillip, the consort of Britain’s Queen Elizabeth II. The knighting was widely ridiculed and criticised and deepened the unpopularity of the government.
Murdoch published a Twitter post declaring that Abbott had to fire his chief of staff, Peta Credlin. “Abbott again,” he wrote. “Tough to write, but if he won’t replace top aide Peta Credlin she must do her patriotic duty and resign.”
Murdoch’s tweet precipitated a crisis in the Coalition that has been developing over an extended period, above all due to the government’s inability, in the face of popular opposition, to impose austerity measures to the extent being demanded by big business. As parliament opens for the year, the Abbott government is still attempting to get several major components of its last budget passed through the upper house, while it must prepare to hand down its next budget in May.
Murdoch’s call for the removal of Abbott’s top advisor, but not Abbott himself, was a clear warning to the PM that there could be no let-up in the government’s pursuit of austerity. The Murdoch press went into over-drive, with shock-jock Andrew Bolt declaring on Wednesday that the knighthood scandal was “so damaging that it could be fatal.” Right-wing columnist Miranda Devine declared, in reference to Credlin, that Abbott had to make a “sacrificial offering… Something that causes him pain, like chopping off his right arm.”
Today’s article in the Fairfax-owned Sydney Morning Herald, “Vulnerable: Abbott still standing, just,” cited several unnamed Liberal MPs on the possibility of a leadership change. A “junior minister” told the paper: “We’re all talking to each other seriously about alternatives to Tony. Those conversations have not taken place before.” An unnamed member of Abbott’s own cabinet said: “We are in a dire position.”
The article stated: “The Abbott government is a hollow edifice, still in place and wielding power, yet without internal support and vulnerable to challenge.” It claimed that both the Deputy Liberal leader and Foreign Affairs Minister Julie Bishop, and Communications Minister Malcolm Turnbull, who in 2010 was ousted as Liberal leader in a narrowly-contested leadership challenge by Abbott, had been approached by colleagues to challenge for the leadership but had so far refused.
The Murdoch-owned Daily Telegraph cited unnamed ministers as claiming that Abbott had a week to shore up support from within his party.
Abbott was compelled to give a press conference on Friday to refute the media speculation, during which he claimed that the government was a “very strong team” because it had “very good captain.” In an attempt to shore up support from within the government, Abbott is predicted to dump his multi-billion dollar parental-leave scheme during a speech on Monday to the National Press Club. Big business has denounced the scheme.
With Abbott’s leadership directly under threat, today’s editorial in the Australian, Murdoch’s national flagship, sought to rein in the infighting. “Despite the supercharged speculation around Mr Abbott’s leadership,” the editors wrote, “he remains the first, best hope of the conservative side.” It noted that potential alternatives to Abbott—specifically naming Bishop and Turnbull—“are not currently plausible.”
The affair has underscored the enormous weight wielded by Murdoch personally and his ability to manufacture political crises to effect right-wing shifts in the political set-up in Australia and other countries. More fundamentally, it reveals the enormous gulf that exists between the political establishment and the vast mass of the Australian population, which has no say over the decisions affecting millions of people made in the interests of the corporate and financial elite.
The Australian editorial made clear that the Abbott government’s response must be to push forward with deeply unpopular budget cuts to healthcare, education and other social services. “[W]hile the Coalition’s fiscal strategy remains in tatters—with its first budget largely blocked even as it prepares to frame its second—its commitment to spending restraint and economic reform is the only viable path for Australia.”
The editorial stated that, at present, it would not support a return of a Labor government without the opposition party enunciating clearly and publicly the means by which it would impose the economic downturn on working people. To date, Labor ministers have maintained a two-faced position—quietly signaling to big business their willingness to impose its austerity demands, while posturing as opponents of the Abbott government’s policies.
This makes clear that the real source of the turmoil facing Abbott government is the impasse confronting the entire political system. Underlying the deepening paralysis of both major parties is their fear that implementing policies that will tear up the living standards of the working class will trigger political and social unrest. Their appeals for “sacrifice” ring hollow amidst the ever-rising wealth of a tiny portion of the population.
Driving the crisis is the worsening economic downturn in Australia. Collapsing world commodity prices—including coal and iron ore—driven by global deflationary tendencies, as well as the deepening economic slowdown of China, the largest buyer of Australian mining exports, have hit government revenues. The value of the Australian dollar has fallen from $US1.10 in July 2011 to $0.77 yesterday. This is fuelling demands for the deepening of US- and European-style austerity.
At the same time, decades of falling living standards, declining real wages and rising social inequality has led both major parties to be despised by the population. Right-wing populist parties, such as mining magnate Clive Palmer’s Palmer United Party, and independents have been able to win seats in the federal parliament, further destabilising the political establishment.
The parliamentary crisis has developed over an extended period. Underlying this have been two inter-related processes: the intensifying global economic breakdown since 2008, and the growing worldwide military tensions—expressed in the Obama administration’s preparations for war against China through the “pivot to Asia.”
The defeat of the Howard government in 2007 saw a sitting prime minister lose his seat for the first time since 1929. In June 2010, Kevin Rudd, a first-term Labor prime minister, was removed in an inner-party coup and replaced by Julia Gillard, as part of a turn toward austerity and in order to align the government directly with the Obama administration’s “pivot to Asia.” The backlash against Labor over the coup in the 2010 election saw it cling to office only by forming a minority government in the first hung parliament in 70 years. The political turmoil prompted the BBC to ask in 2013 whether Australia had become the “coup capital” of the world.
The continuing political impasse is fuelling deep frustration within ruling circles. Behind the scenes, discussions over alternative, authoritarian forms of rule are taking place. That is the significance of Abbott’s decision to bestow the Australia Day knighthood on two pillars of the Australian state: the British monarchy, in the person of Prince Phillip, and the armed forces, in the person of former military head Angus Houston.

Target CEO’s “golden parachute” exceeds total severance for 17,600 Canadian workers

Carl Bronski

In the wake of one of the largest single layoffs in Canadian history, it has been revealed that the 2014 separation package for Target department store CEO Gregg Steinhafel exceeds the severance payments for all of the 17,600 employees who have lost their jobs as a result of the January 2015 Target Canada bankruptcy.
Earlier this month, Target announced that it will close all of its 133 retail outlets in the country. The laid-off employees will receive up to 16 weeks compensation in wages and benefits. The amount set aside roughly meets the minimum requirement for severance packages as set out by labour law. To cover the payments to its employees, Target has earmarked $56 million (US).
In contrast, as the company bled red ink, CEO Steinhafel cashed in with a spectacular “golden parachute” last May totaling $61 million (US) in monies and deferred stock options after he was forced by the Board of Directors to resign his position. Steinhafel had spearheaded the expansion of Target stores into Canada in 2013 which quickly turned into an epic fiasco. Seven billion dollars were invested in the Canadian expansion. In only 681 days of operation, the company recorded losses of at least half of that.
Canadian customers, reeling from stagnating wages and high unemployment rates that have been endemic in Canada since 2008, had steered away from the department store in droves due to uncompetitive price points and poor selection. In its request for Steinhafel’s resignation, the board also cited fallout from the massive January 2014 data breach of credit card information for its US-based customers that occurred during his tenure. Neither occurrence, however, was enough to diminish the CEO’s lavish payday. Indeed, after his resignation, Steinhafel was kept on for several months by the board in an advisory capacity.
Due to draconian cuts to unemployment eligibility by the Conservative government of Prime Minister Stephen Harper and the increasing use of part-time workers by retailers, many of the Target workers will not have earned enough hours to claim unemployment insurance payments after their meagre severance payments run out.
The obscene discrepancies between the earnings of workers and those at the top of the corporate ladder will come as no surprise to working people. A new study has shown that Canada’s top 100 CEOs received compensation increases double the rate of average wage-earners from 2008 to 2013. In 2013 alone, CEO pay increased by 11 percent.In that year the country’s top executives raked in an average of $9.2 million.
In Canada, the top CEOs now receive 206 times more in annual compensation than the average Canadian worker. In the United States, where Steinhafel resides, CEOs earn 354 times as much as the average worker at their companies. Steinhafel managed to outpace even this outrageous gap. His 2013 pay was 597 times greater than those of the average Target worker, second only to Walmart CEO Michael Duke, who received 1,034 times more in compensation than workers in his company.
Overall, average wages for workers in Canada have continued to stagnate with earnings rises falling behind the annual inflation rate over the past eight years. The average Canadian income in 2013 stood at $47,358. In Ontario, the heart of the Canadian manufacturing sector, the median income has fallen by 3.2 percent since 2006. In Windsor, an ever-diminishing hub of Canadian auto manufacturing, the median income has collapsed by almost 14 percent. In Toronto, the financial centre of the country, wages have fallen by 3.2 percent over that same time period.
The pervasive and ever-increasing growth of social inequality is the most fundamental characteristic of contemporary social and political life, not just in Canada and the US, but internationally. It is rooted in the very nature of the capitalist system. In every country, corporate chiefs unashamedly enrich themselves while overseeing the wholesale destruction of jobs, wages and working conditions of ordinary working people, and demanding governments further slash essential social programs to fund tax cuts and boondoggles for the wealthy few.
The obscene levels of wealth at the top of society and growing economic distress among the broad masses is a product of the underlying capitalist economic system.

Fate of ISIS’s Japanese and Jordanian captives uncertain

Ben McGrath

As of today, there was still no word about the fate of a Japanese journalist and Jordanian pilot being held captive by the Islamic State of Iraq and Syria (ISIS). The group has threatened to kill both men unless its demands were met. Neither Tokyo nor Amman has reported any new developments since the latest deadline for a prisoner exchange expired Thursday sundown in Syria.
Kenji Goto, the 47-year-old Japanese reporter being held by ISIS, appeared in a video on Tuesday holding a photo of a man believed to be Jordanian pilot Lieutenant Moaz al-Kasasbeh. The pilot was conducting a bombing run on ISIS targets in northeastern Syria last month, as part of Jordan’s involvement in the renewed US-led renewed war of aggression in the Middle East, when his plane crashed and he was taken prisoner.
In the video—a still picture with audio—Goto relays an ISIS demand that the Jordanian government free Sajida al-Rishawi, an Iraqi woman currently jailed in Jordan, in exchange for his own release. Rishawi was sentenced to death for her role in a 2005 suicide bombing of an Amman hotel that resulted in the deaths of 57 people. While her husband and two others carried out the attack, Rishawi’s bomb failed to detonate and she was later arrested.
Goto states in the video: “Any more delays by the Jordanian government will mean they are responsible for the death of their pilot, which will then be followed by mine. I only have 24 hours left to live and the pilot has even less.”
The 24-hour deadline passed and while it was extended another day, there has been no progress on securing the hostages’ release, raising concerns that they may have already been executed.
ISIS had stated that Kasasbeh would be killed on Thursday unless Rishawi was presented at the Turkish-Syrian border. Jordan appeared willing to make the exchange on condition that it received confirmation its pilot was still alive.
It is not clear whether one or both hostages would be exchanged for Rishawi, but Jordan has made no moves to prepare her for an exchange. According to news reports, she has not left the country.
“At this point we want to emphasize that we have asked for proof of life from Daesh (ISIS) and we have not received anything yet,” Jordanian government spokesman Mohammad al-Momani said on Thursday.
The Japanese government said it was working closely with Jordan. Chief Cabinet Secretary Yoshihide Suga stated: “As the situation is developing, I shouldn’t comment on details. But, Japan and Jordan are dealing with the matter based on an extremely trusting relationship.”
Goto first appeared in an ISIS video on January 20, alongside a second Japanese man, Haruna Yukawa. Japan was given 72 hours to pay a $200 million ransom, the same amount that Prime Minister Shinzo Abe has pledged to countries fighting ISIS.
A second video featuring Goto was released last Saturday, with the reporter holding a photo of a decapitated Yukawa, although the latter’s death has not been confirmed.
While the Japanese government claimed that it was pursuing every avenue to secure the release of its citizens, it ignored offers of help last week from Ko Nakata, a Muslim scholar, and Kousuke Tsuneoka, a freelance reporter.
Tsuneoka, who was released after being held hostage in Afghanistan in 2010, visited Syria in September in an unsuccessful attempt to gain Yukawa’s release. Tsuneoka and Nakata were prevented from leaving Japan in October after the police seized their passports.
Neither government is genuinely concerned about the fate of their citizens.
Despite widespread domestic opposition to its participation in the latest US-led military aggression in Iraq and Syria, the Jordanian government remains a loyal Washington ally. Jordan has been used by the US military as a training ground for Islamist militants sent to fight Syrian President Bashar al-Assad regime. Many of these so-called rebels have gone on to join the ranks of ISIS.
Yesterday, according to one press report, Jordan has threatened to fast-track the execution of Sajida al-Rishawi and other ISIS prisoners in Jordan if the terrorist group killed Moaz al-Kasasbeh. In other words, Amman will match ISIS savagery with its own barbaric response.
The Japanese government has seized on the hostage crisis to push forward with its plans for remilitarization. Abe’s government is preparing to submit 10 bills to the Diet, Japan’s parliament, in order to codify in law the government’s reinterpretation of the constitution ease restrictions on the Japanese military.
The new laws would allow the Japanese military to be sent overseas to support US-led military interventions without the approval of the parliament. Another law would make it easier for the government to suspend basic democratic rights during any emergency situation, an indication of the sort of repressive measures that will be imposed against anti-war protesters or others opposing Tokyo’s military policies.
The Obama administration has made clear that is opposes any negotiations with ISIS. On Sunday, White House Chief of Staff Denis McDonough stated: “The policies are well set: the US doesn’t pay ransoms and will not do prisoner swaps.”
The US government is intent on exploiting this hostage crisis, as it did the ISIS executions of American journalists James Foley and Steven Sotloff last year, to justify expanding its new war in the Middle East and operations targeting the regime of Syrian President Bashar al-Assad.

Germany to send troops into northern Iraq

Johannes Stern

On Thursday, Germany’s Bundestag (parliament) agreed to send armed troops to northern Iraq. In February, Bundeswehr (Armed Forces) troops will deploy to Iraq, supposedly to train Kurdish Peshmerga to fight the Islamic State (IS). The marching orders were issued by a large majority; 457 of the 590 parliamentary deputies voted for the deployment, 79 voted “no,” and 54 abstained.
Rolf Mützenich, the foreign policy spokesman for the Social Democratic Party (SPD) parliamentary group, justified the government’s military intervention, calling the struggle against the IS a “military challenge.” The “liberation of Kobane [shows] that this struggle needs to be conducted militarily,” he said. Fighting ISIS encompasses more “than just a military approach, but without the military approach there will be no basis for political solutions,” Mützenich said.
A year after President Gauck, Foreign Minister Frank-Walter Steinmeier (SPD) and Defence Minister Ursula von der Leyen (CDU, Christian Democratic Union) announced the end of German foreign policy restraint at the Munich Security Conference, German foreign policy is ever more militaristic.
Last week, Chancellor Angela Merkel (CDU) announced expanded German engagement in Africa and support for a regional intervention force against the terrorist militia Boko Haram. Earlier this year, von der Leyen raised the prospect of new arms deliveries to the Kurds. Also yesterday, the Bundestag decided to extend the deployment of German Patriot missile batteries in Turkey.
The mission in Iraq heralds a new stage in the return of German militarism. For the first time since the terrible crimes of German imperialism in two world wars and the defeat of Nazi Germany, Berlin is sending troops into a war zone without an international mandate.
Such actions are not covered by the German constitution and set a precedent for the global deployment of the Bundeswehr into crisis areas. Strictly speaking, the constitution only allows the use of the Armed Forces in cases of national defence. After German re-unification in 1990, the Supreme Court reinterpreted the law in a judgment and declared foreign missions constitutional if they were part of “mutual collective security”. As a result, interventions agreed by the UN or NATO were legally covered.
The deployment of troops to Iraq is yet another legal quantum leap. It is not covered by a UN nor a NATO mandate. Germany is de facto intervening unilaterally into a war zone in order to arm one of the parties to the civil war—in this case, the Kurdish Peshmerga—to train them and, if possible, to support them in combat operations.
Only recently, it was announced that Canadian soldiers were attacked by IS fighters with mortars and machine guns. They were also officially sent there as “trainers”, in reality they were immediately involved in fighting the IS. As the Canadian Special Operations Forces’ commander Mike Rouleau admitted, the “trainers” supplied targets for the US-led air war against the IS in northern Iraq and Syria.
In his speech, the foreign policy spokesman for the Green Party in the Bundestag, Omid Nouripour, frankly admitted that in reality, the deployment is a combat mission. “There’s a novelty,” he said. “We are sending mandated soldiers. It may be that they get involved in combat operations; otherwise we would not have to mandate them.”
The former pacifists in the Green Party, who ever since supporting the 1999 Kosovo war have supported every Bundeswehr mission abroad, largely abstained. However, they left no doubt that they support the intervention in principle. “We are for training,” Nouripour said. His only objection was that it was “irresponsible” to send the soldiers on a mission “without rules of engagement.”
By supporting the Kurdish peshmerga, German imperialism is returning to classic forms of colonial politics. Even during World War I, plans for “alternative conduct of war” were developed in the foreign ministry in Berlin. At that time, the German ruling class worked closely with the Ottoman Empire and Arab Bedouins to pursue its geo-strategic and economic interests in the Middle East—aiming to weaken their opponents England, France and Russia, by stoking an “Islamic revolt.”
Significantly, German papers of the time repeatedly pointed out that the name of the town, Kobane, was not of Kurdish but German origin, and was based on German-Turkish collaboration. During the construction of the Baghdad railway in 1912, a small railway station was built, which the Kurds called Kobane, referring to the German “company” that was responsible. Over time, it became the Kurdish “Kobani.”
In an article titled “What is German in Kobane,” the Süddeutsche Zeitung wrote: “They were Imperial German railroad barons, dashing nobles who came and led the command; the construction of the rail track should fulfil their imperial dream of a connection between Berlin and Baghdad, the planned route went through Aleppo and Mosul.” It continues, “The route of the track of the former Baghdad Railway today marks the border between Syria and Turkey. This is what the victors of the First World War, Britain and France, wanted as they divided up the Ottoman Empire.”
Berlin’s intervention in Iraq is in line with in the historic interests of German imperialism. While the imperialist powers are not (yet) engaged in military struggle with each other, unlike a century ago, the tensions among them are mounting under the surface of the joint fight against the IS.
Mützenich tried to justify Germany’s solo effort, saying, “Some advice says we should seek a European framework. That may be. But yesterday, in the Foreign Affairs Committee, the foreign minister indicated—and we should clearly say that in public—how difficult this process is with the European partners. To mention that is part of being honest; because different governments follow different goals.”
The Left Party, which voted unanimously against the military mission, plays a key role for German imperialism in the region. It functions both as an “adviser” to help formulate imperialist policy, and to open doors across the region.
Like the representatives of the government and the Greens, Left Party foreign policy spokesman Jan Van Aken also praised military action against ISIS. “I think we should first of all celebrate together that this week Kobane has been freed,” he said at the beginning of his speech, adding: “My thanks and my deep respect to the men and women who have fought in recent months against the misanthropists of ISIS, risking their lives, which some of them lost.”
The Left Party’s criticism of the military mission is purely tactical, however. Van Aken, who regularly visits the region, said Berlin’s unilateral support of the Peshmerga would “strengthen and not weaken [ISIS] in the long term,” because it “drives forward the division of Iraq”. Even if one supported weapons deliveries and a Bundeswehr intervention, Van Aken said, “then this intervention is exactly the wrong one”. It entailed training “the wrong people for the wrong goals,” he claimed.
The Left Party’s representatives were the first to call for arms deliveries to the Kurds and demand a massive military operation against ISIS. In his speech, Van Aken took up this aggressive line, advising the government about how best to fight the IS militarily. If Berlin followed the Left Party’s ideas, he said, Germany would not only arm the Kurds, but install new puppet governments across the region.
“If you want to fight ISIS militarily, then you can only if you get rid of the hatred by installing a broad, a fair government in Baghdad which will share the wealth fairly between the Kurds, Shiites and Sunnis. This must be the political goal.” He added, “If you want to act effectively militarily against ISIS, then shut the borders and apply pressure on Turkey.”

Obama administration moves to open US coastlines to offshore drilling

Nick Barrickman

In a major giveaway to US energy corporations, the Department of the Interior announced January 27 that it would open a large section of the Atlantic coast to oil and gas drilling for the first time, as well as expanding exploration in the Gulf of Mexico and parts of the Alaska coastline.
The proposal would cover a leasing period from 2017-2022, with 10 previously-protected locations in the Gulf, three in Alaska and a single large swathe of the southeast Atlantic coast, from Virginia down to Georgia. The formal bidding process would begin after a six-month period of public comment.
Drilling would continue to be banned on the Pacific coast and on the Atlantic coast from Delaware north, as well along the entire coastline of Florida, in both the Atlantic and Gulf of Mexico.
“The safe and responsible development of our nation’s domestic energy resources is a key part of the President’s efforts to support American jobs and reduce our dependence on foreign oil,” said Secretary of the Interior Sally Jewell. While claiming the administration would protect “areas that are simply too special to develop,” she reassured industry groups that “the areas off the table are very small in comparison to areas on the table.”
The action by the Department of the Interior is the first major expansion of offshore drilling since the 2010 Deep Horizon oil spill, where the blowout of a BP exploration well resulted in the worst environmental disaster in US history. The Obama administration had just begun the approval process for drilling in the Atlantic off Virginia when the Gulf disaster took place, forcing it to postpone the action for nearly five years.
Besides the ten new locations in the Gulf of Mexico, the DoI draft proposal would open at least three additional areas on the Alaska coast—the Beaufort Sea, Chukchi Sea and Cook Inlet—while certain other portions of the region would remain off-limits to drilling.
The decision to open up the Atlantic coast for drilling was widely hailed by oil companies and their political allies. “It’s encouraging to see the federal government finally acknowledge what we’ve been fighting for with our federal delegation for years,” said South Carolina Republican Governor Nikki Haley of the announcement.
Similarly, Democratic Senators Mark R. Warner and Timothy M. Kaine of Virginia referred to the move as a “significant step . . . that should result in the safe, responsible development of energy resources off the Virginia and mid-Atlantic coasts.” The senators expressed eagerness to put their state on the payroll of the oil companies, noting that, “we will continue to push for legislation to allow Virginia to have the same revenue-sharing system currently applied to Gulf Coast states.”
A number of economists expressed doubt that energy executives would be interested in undertaking a significant expansion of production into new areas, given the current record low prices holding sway within the industry. “There would be a big risk that companies would take by sinking the capital to explore and develop these wells not knowing how productive they will be,” Chris Lafakis, a senior energy economist at Moody’s Analytics, said in a statement to the Raleigh News Observer .
DoI officials have sought to assuage fears of another environmental catastrophe on the scale of the 2010 BP spill. Speaking to the New York Times, Janice Schneider, the Interior Department’s assistant secretary for land and minerals management, insisted that as a result of the Gulf disaster “there were investigations to reduce the likelihood of problems in the future,” adding that “we are working actively to get those proposed rules out on the street as soon as possible, and working with industry to ensure those rules reflect the best technology.”
Despite this massive sale of resources in federally protected areas, representatives of the oil industry expressed their dissatisfaction with the relatively limited number of offerings in the Atlantic and the Arctic. “At this early stage, it would be premature and irresponsible to leave out of the draft program any area that holds the potential for significant discoveries of oil and natural gas,” stated Erik Milito, director of offshore and industry operations for the American Petroleum Institute. Similarly, Alaska Republican Sen. Lisa Murkowski called the relatively small number of openings for drilling a “one, two, three kick to the gut of Alaska’s economy,” adding that her office would “do everything we can to push back” against the administration on this proposal.
The Obama administration has sought to provide assurances to the various oil conglomerates dictating its energy policies in the face of a vast decline in oil prices throughout the global market. Earlier this month, after years of effecting measures aimed at damage control, a federal judge agreed to write down the total amount of fines owed by energy giant BP for its role in the 2010 Deep Horizon spill in the Gulf of Mexico. Despite damages potentially mounting in the trillions, the firm is now liable to pay a mere $13.7 billion, a fraction of its yearly profits.
“Our coastal economies are the backbone of hundreds of towns and cities along the Southern coast, providing thousands of jobs, multibillion-dollar tourism industries, multimillion-dollar fishing industries, and critical local tax revenues,” stated Sierra Weaver of the Southern Environmental Law Center to the New York Times.