European Central Bank tightens its grip on Greece in response to Syriza “debt swap” proposal

Nick Beams

The “debt swap” menu proposed by Greek Finance Minister Yanis Varoufakis during his tour of European capitals this week has two central objectives.
It is aimed at ensuring that there is a continuous flow of money out of Greece, stretching into the indefinite future, in repayment of its €315 billion foreign debt, while at the same time giving some breathing space for the new government and creating the illusion that it has won some genuine concessions from the European banks.
Vourafakis’s plan followed the repudiation of the central plank of the program on which it was elected to government just two weeks ago—the writing off of the greater part of the public debt. Recognising that such a “hair cut” would not be accepted, Vourafakis crafted his proposals accordingly.
He proposed that Greek bonds owned by the European Central Bank be converted into perpetual bonds. Normally a bond stipulates that the issuer will redeem its face value at the end of its term. If the existing bonds were made perpetual they would never be redeemed and the Greek government would continue to pay interest on them indefinitely. This would have the effect of writing down the value of the debt owed by the Greek government, though in practice it would make little difference because the existing bonds are long term, extending over more than 30 years.
The other proposal was that interest payments on bonds held by European governments would be indexed to nominal economic growth. That is, if Greek growth increased, the payments would increase, and they would decline as growth fell.
Vourafakis also proposed that the stipulation that Greece should run a budget surplus, after interest payments, should be reduced from 4 percent of gross domestic product to between 1 and 1.5 percent. He insisted this requirement would be met even if it meant the Syriza government would not meet many of the public spending promises on which it was elected.
The proposals won initial support, with the Financial Times commenting in an editorial that as Vourafakis sought support for the new deal he deserved “a full and even sympathetic hearing.”
The Financial Times also indicated that, as most of the Greek debt is owed to other European governments, Vourafakis’s insistence that he talk directly to those governments, rather than to the troika—compromising the European Commission, the European Central Bank and the International Monetary Fund—may have some merit. It seems the Financial Times is of the belief that a Syriza government may be the best instrument for breaking up the power of the Greek oligarchs and opening up lucrative sections of its economy to access by international financial institutions.
But after winning some initial expressions of support, Vourafakis’s mission suffered a significant setback on Wednesday when the European Central Bank intervened.
Having, at least nominally, repudiated the existing bailout terms, the Syriza-led government is seeking €10 billion in “bridging” finance while a new agreement is worked out over the next three months.
However, the ECB put a spoke in its wheel when it withdrew the waiver on the use of Greek government bonds held by Greek banks as collateral for loans it provides.
Under its rules, the ECB should not accept Greek bonds as collateral as they are of sub-investment grade, essentially junk-rated. But the ECB had agreed to waive that stipulation, provided the Greek government remained compliant with the terms put in place by the troika. With the decision of the government to withdraw from that agreement, the ECB announced that it was ending the waiver.
The issue would have come up anyway at the end of the month, when the present agreement was due to run out. This would have required agreement for an extension which the Greek government has said it will not seek. Wednesday’s ECB decision has served to speed up the confrontation.
In its statement, the ECB said it had taken the decision “in line with existing Eurosystem rules since it is currently not possible to assume a successful conclusion of the program review.” However, it said that Greek banks would still be able to obtain funds from the country’s central bank “by means of emergency liquidity assistance (ELA) within the existing Eurosystem rules.”
The decision, while not completely undermining the Greek banks, has, nevertheless, dealt them a major blow because it has reduced the collateral they have available when seeking loans from the ECB. Consequently, shares fell sharply after the decision was announced.
The Greek banks are facing growing liquidity problems because of significant cash withdrawals in the recent period. According to a report in the Economist magazine, some €4.4 billion was withdrawn in December and more than double that amount in January.
Much of this money consists of funds being taken offshore by financial oligarchs seeking a “safe haven” in case capital controls or other government restrictions are imposed. Some of them will also have made the calculation that if the crisis deepens and Greece withdraws from the euro zone, they will be able to use offshore funds to pick up lucrative assets. These would be at rock-bottom prices as a result of the severe devaluation of a reinstated drachma as the national currency.
While the Greek banks will still have access to liquidity through the country’s central bank under the terms of the ELA, the ECB move is a significant tightening of its grip both on the Syriza-led government and the national banking system.
The ECB has the power both to determine the amount of ELA and can decide to withdraw it completely.
As the Economist noted, the “Greek banks’ growing dependence on ELA leaves the government at the ECB’s mercy as it tries to renegotiate the bailout.”
It also pointed out that the ECB has taken action previously. In 2013, the ECB announced that it would stop the authorisation of ELA to Cypriot banks within days unless the government agreed to its bailout terms, forcing it to accept. A similar threat was used to get agreement from the Irish government in 2010.

Saudi Arabia, 9/11 and the “war on terror”

Patrick Martin

More than 13 years after the 9/11 terrorist attacks, evidence in a federal lawsuit brought by relatives of the victims is a devastating exposure of events and relations long covered up and obscured by the media and political establishment: that Al Qaeda and the 9/11 hijackers were financed by the Saudi monarchy, a top US ally with extensive ties to US intelligence agencies.
Affidavits filed with Federal District Judge George P. Daniels substantiate claims that leading figures in the Saudi monarchy, including its longtime ambassador to Washington, Prince Bandar bin Sultan, a nephew of the current Saudi monarch, King Salman, financially supported Al Qaeda.
The documents include a deposition from Zacarias Moussaoui, the only individual convicted of direct participation in the plot to hijack airplanes and fly them into the World Trade Center and other US targets on September 11, 2001.
Moussaoui testified that while working for Al Qaeda in Afghanistan in the 1990s he prepared a digital database of the group’s financial backers that included Prince Bandar and two other high-ranking Saudi princes: Prince Turki al-Faisal, the longtime head of Saudi intelligence, and Prince Alwaleed bin Talal, chairman of the Kingdom Holding Company and the wealthiest member of the royal family.
He also described working as a courier for bin Laden, bringing messages to members of the Saudi royal family, including Prince Salman, then the governor of Riyadh, who today is King Salman after succeeding to the throne last month.
The New York Times published lead articles Wednesday and Thursday highlighting the new allegations of Saudi backing for the 9/11 attacks. These had less the character of an exposé, however, than of a semi-official attempt to contain the impact of the material being released as a consequence of the 9/11 families’ lawsuit.
This is the apparent reason for the articles’ near-exclusive focus on Moussaoui, a witness whose testimony can be more easily dismissed by the political establishment. The legal papers filed with the federal district court included Moussaoui’s deposition, but much more, including allegations of Saudi complicity in 9/11 from such pillars of the Washington establishment as former senator Robert Graham of Florida. He wrote, “I am convinced that there was a direct line between at least some of the terrorists who carried out the Sept. 11 attacks and the government of Saudi Arabia.”
Graham is in a position to know. He chaired the Senate Intelligence Committee in 2002 when it produced a lengthy report on the 9/11 attacks. This included a 28-page section on Saudi support to the 9/11 hijackers that was classified and suppressed by the Bush administration, an act of censorship that was endorsed and continued by the Obama administration. Senator Graham, who favors the release of this material, wrote, “The 28 pages primarily relate to who financed 9/11, and they point a very strong finger at Saudi Arabia as being the principal financier.”
The evidence of Saudi complicity in the 9/11 attacks is a devastating exposure of the fraudulent nature of the “war on terror,” the axis of US national security policy for more than 13 years.
The Bush administration used the 9/11 attacks as the pretext for wars against Afghanistan, whose government had provided shelter to Osama bin Laden, but had no involvement in 9/11, and against Iraq, which had no connection to either 9/11 or Al Qaeda. Meanwhile Saudi Arabia, the country that supplied Al Qaeda’s funds, its principal leader, and 15 of the 19 hijackers, was deemed a key US ally.
Every official investigation into the 9/11 attacks had to whitewash the Saudi connection—or be censored, like the Senate Intelligence Committee report. The issue was not just the reactionary role of the Saudi monarchy in financing and supporting Al Qaeda, but the close ties between US intelligence agencies and the supposedly anti-American terrorist group—connections on which the latest Times articles are completely silent.
There is every reason to believe that nearly 3,000 Americans were murdered on September 11, 2001 with the tacit or active complicity of sections of the US military-intelligence apparatus. The CIA, FBI and other agencies took no action to disrupt the operations of the terrorists, even though many of the individuals involved were known to US security agencies and several were under active surveillance as they planned and executed the simultaneous hijacking of four US jetliners.
Many questions about the complicity of US agencies with the 9/11 attacks were raised within weeks of the destruction of the World Trade Center. Some were detailed in a series of articles on the World Socialist Web Site just over 13 years ago: see “Was the US government alerted to September 11 attack?”
Thirteen years later, these questions are still unanswered:
* Why were the 9/11 hijackers allowed to travel in and out of the United States freely, even those like Mohammed Atta, who were under surveillance for Al Qaeda connections?
* Why did the CIA fail to inform the FBI of the entry of two Al Qaeda associates into the United States in early 2001? These two lived in San Diego at the home of an FBI informant, sought pilot training, and received funds from Saudi sponsors in Washington. One was listed in the phone book. On September 11, 2001, they were 2 of the 19 hijackers.
* Why were the future hijackers allowed to take flight training, including Moussaoui, who asked to learn how to steer a jumbo jet but not how to take off and land? When Minnesota FBI agents sought to probe Moussaoui’s actions and motives, a month before the 9/11 attacks, FBI headquarters denied requests to search his computer.
* Why was no effort made to respond to repeated warnings from foreign intelligence services, including Russia, Israel, and Germany, about terrorist plans to hijack US airliners and fly them into buildings?
The crimes committed on 9/11 took nearly 3,000 lives. The crimes committed using 9/11 as a justification have taken hundreds of thousands if not millions of lives, in Iraq, Afghanistan, Yemen, Syria, Libya and a dozen other countries. And 9/11 has served as the all-purpose justification for the wholesale destruction of democratic rights in the United States and other imperialist countries, which have created the framework for police states in the name of preventing “another 9/11.”
Covering up the Saudi connection is critical not only in concealing the role of US intelligence agencies in the events of September 11, 2001, but also to ongoing operations of US imperialism throughout the Middle East, where Washington relies on the reactionary Saudi monarchy as one of its main agencies. This was signaled last month in Obama’s trip to Riyadh to pay homage to the new king, Salman—one of those named as a financial supporter of Osama bin Laden.
The Saudi connection has been critical to the continuing relations of American imperialism with Al Qaeda and other Islamic fundamentalist groups. These forces were first mobilized in the 1980s as part of the campaign by the Carter and Reagan administrations to subvert the Soviet-backed regime in Afghanistan and foster the disintegration of the USSR. The mujahedddin —including Osama bin Laden—were armed and trained by the CIA and financed by Saudi Arabia. They have more recently been used to overthrow the Libyan regime of Muammar Gaddafi and to undermine the Syrian government of President Bashar al-Assad.
ISIS itself is a product of this insidious relationship. It originates in the Sunni fundamentalist backlash to the US invasion of Iraq in 2003—prior to the US invasion, there was no Al Qaeda presence in Iraq. Al Qaeda in Iraq reemerged as the Islamic State of Iraq and Syria, one of the strongest Islamist groups fighting against the Assad government in Syria, with the aid and training of the US, Saudi Arabia and Qatar. It was only when ISIS fighters crossed back over into Iraq and began attacking the US-backed puppet regime in Baghdad that the group became the target of US bombs and propaganda.
Yet at the center of the entire “war on terror” is a monumental and brazen lie, the claim that 19 hijackers plotted and carried out a major attack on New York City and Washington, D.C., without anyone in the vast US military-intelligence apparatus being aware of what they were preparing. The latest revelations about the Saudi role in 9/11 are another blow against this web of fabrication and cover-up.

NATO doubles combat forces in Eastern Europe

Johannes Stern

The defence ministers of the NATO military alliance decided at a meeting Thursday at NATO headquarters in Brussels to double their combat forces in eastern Europe. The imperialist powers are massing their troops to compel Russia to make concessions and subordinate itself to their interests in Eastern Europe and Asia.
NATO’s rapid reaction force (NRF), composed of ground, sea, air and special forces, is to comprise 30,000 soldiers in future. The number of the troops, previously set at 13,000, is to be more than doubled. Of these, 5,000 soldiers will be trained within a year for a special emergency rapid reaction force. This spearhead will be ready to deploy in a crisis situation within 48 hours, and the entire NRF force within a week.
In addition, NATO agreed to station six so-called command and control units in the three Baltic states, as well as Poland, Romania and Bulgaria. According to NATO Secretary General Jens Stoltenberg, the command units are “important units” because they “will plan, they will organise exercises. And they will be key for connecting national forces with NATO reinforcements.”
At the same time, NATO’s northeast corps in Stettin, Poland, which serves as NATO’s headquarters in Eastern Europe, is to be further expanded. Similar centres are to be established in southeast Europe.
Stoltenberg left no doubt that these measures were directly aimed at Russia. He described them as “the biggest reinforcement of NATO since the end of the Cold War.”
At a press conference, he said, “Everything we do, when it comes to increasing our own collective defence, by establishing an enhanced NATO Response Force and establishing the very high readiness force, the Spearhead Force... is a response to what we are seeing from Russia over a period of time, and it is in full accordance with our international obligations. So this is something we do as a response to the aggressive actions of Russia violating international law and annexing Crimea.”
Germany, which overran the USSR in the World War II and conducted a brutal war of extermination in Eastern Europe, is playing a central role in the NATO offensive. An article in the online edition of the Frankfurter Allgemeine Zeitung (FAZ), provocatively titled “Germans to the front!” documented how Berlin is pushing forward with rearmament in Eastern Europe behind the backs of the population.
The German-Dutch commando in Münster, which has been leading NATO’s land-based forces since the middle of January, will now also take over leadership of the rapid reaction force. The centre of the spearhead will thus be composed of an airborne brigade of the Dutch army with 3,000 men. The German army is contributing a battalion of tank grenadiers from Marienburg, Saxony with 900 soldiers. Norway will also send artillery which can be rapidly deployed. In addition, there will be 450 soldiers from the multi-national force at the corps’ headquarters.
Furthermore, Germany will double its contingent of troops at Stettin, from which 60,000 soldiers would be commanded in the event of war between Russia and a NATO member. With this additional personnel, the troops already stationed there are to be given the capacity to respond more quickly in a serious situation.
In April, a German paratroop company will reinforce American units which have been stationed in Eastern Europe since last year. They are to be deployed in Poland, then in Lithuania and Latvia. From September, the German air force will once again participate in air reconnaissance in the Baltic Sea. Germany already sent Eurofighters to the Baltic last year. However, at the beginning of this year they were temporarily removed.
The article’s author, Thomas Gutschker, is well connected to the military due to his previous work as a journalist with the German army, and he gives an idea of how far advanced NATO’s plans for war against Russia are. He described the military concept plan for leading the NATO rapid reaction force, which was agreed by NATO defence ministers in Brussels.
“The NATO supreme commander gives the alarm to the rapid response force. The parts of the force then meet at a joint location. From there, they will be brought to the deployment zone. This makes voting easier, and political consultation, both in the North Atlantic Council as well as in capital cities. In Germany, the parliament would have to meet. In the case of imminent danger, the German government can unilaterally decide to send troops. Parliament would then have a retrospective right,” he wrote.
The article describes the logistical difficulties confronted by the German army. Although it had since its Afghanistan mission “experience in the deploying of troops and heavy weaponry,” now “everything is to be done very quickly and new questions are posed: does the railway company have enough flat carriages to transport tanks? Or is it easier to charter a ship that can be loaded and unloaded at the same time? For the extremely rapid reaction force aircraft will be required that only the Americans have. In the summer, a major deployment exercise is planned, the second NATO test.”
German defence minister Ursula von der Leyen (Christian Democratic Union, CDU) called the NATO decisions a “sign of unity and decisiveness” and “important for NATO’s internal strength.” In an interview with the S ü ddeutsche Zeitung, she was full of praise for the German-led rapid response force, which “is capable of deploying within a few days,” and she hailed Germany’s return to an aggressive foreign policy.
Over the past year, Germany has “appropriately assumed responsibility in all of the major crisis situations: in the Ukraine-Russia conflict as well as in the struggle against the so-called Islamic State, in Africa, in Afghanistan. The same goes for our major contribution to the internal security of NATO. We have influenced the West’s actions, diplomatically and militarily. That is responsibility.”
In reality, the foreign policy of the German government and the west is not only not “responsible,” but ruthless and dangerous. At the beginning of 2014 President Gauck, foreign minister Steinmeier and von der Leyen announced the end of Germany’s restraint in foreign policy at the Munich Security Conference.
Only a few weeks later, Berlin and Washington organised a coup in Ukraine, backed by extreme right-wing and fascist forces, to install a pro-Western government and encircle Russia. One year later, the conflict in Ukraine provoked by the West threatens to escalate into an open war with Russia, a nuclear power.
Parallel to NATO’s meeting, US secretary of state John Kerry arrived in Kiev to reassure the regime--which is conducting a brutal civil war against the population in eastern Ukraine--of his support. The US will not close its eyes while Russian tanks and fighters are crossing the border, Kerry told Ukrainian President Petro Poroshenko.
Russia issued a warning to the US about arming the Ukrainian government’s forces against the pro-Russian separatists in the east. The announcement at the beginning of the week that the US would supply lethal weapons to Kiev could “colossally damage US-Russian relations,” said Alexander Lukashevich, the spokesman for the Russian foreign ministry.

German, French leaders fly to Russia amidst warnings of “total war” over Ukraine

Alex Lantier

As fighting between pro-Russian separatists and the NATO-backed Kiev regime escalates in east Ukraine, and as NATO foreign ministers announced a massive troop deployment throughout Eastern Europe, France and Germany have suddenly announced plans to travel to Russia to propose a new “peace plan.”
German Chancellor Angela Merkel and French President François Hollande traveled to Kiev yesterday to meet with Ukrainian President Petro Poroshenko, who also met US Secretary of State John Kerry for talks originally scheduled to discuss US plans to directly arm the Kiev regime. Merkel and Hollande are scheduled to travel today for talks in Moscow, which has supported the separatists in the civil war in east Ukraine unleashed by the NATO-backed coup in Kiev a year ago.
The diplomatic maneuvers take place as the efforts of the US and the European powers to force Russia to back down in Ukraine threaten to unleash a war of incalculable consequences. Russian officials have also stated that if Washington arms Kiev for a large-scale offensive in east Ukraine, the Russian army will intervene to prevent Kiev from massacring the separatists, which could lead to a major land war in Europe and possibly a world war involving nuclear-armed powers.
French President François Hollande announced his trip with Merkel to Kiev at a press conference at the Elysée presidential palace yesterday. “We have gone in the space of a few months from having differences, to conflict, to war ... We are in a state of war, and a war that could be total,” he warned.
Echoing statements by Merkel earlier this week, Hollande said he opposed plans for NATO to arm the Kiev regime, apparently referring to reports Monday that the Obama administration is considering providing Kiev with billions of dollars worth of “defensive” weapons. “I am sure I will be told there is a difference between defensive and offensive weapons, but that is a matter of semantics,” Hollande said. He added that France did not support Ukraine joining NATO.
Claiming that France was a “friend” of Russia, Hollande said: “Time is short, and it will not be said that France and Germany together did not try everything, attempt everything to preserve peace.”
German Foreign Minister Frank-Walter Steinmeier, who is holding talks in Poland and Latvia, said Berlin and Paris hope to avoid a “total loss of control” over the escalation of the fighting.
Kremlin advisor Yuri Ushakov replied that Russia was “ready for a constructive conversation” to establish dialog and economic relations between Kiev and the eastern separatists.
Nonetheless, few details emerged on what Berlin and Paris are proposing. Yesterday evening, the German daily Süddeutsche Zeitung posted an article on the plan, titled “New Peace Plan in Ukraine: More Territory for Separatists.” Describing the plan as based on last year’s Minsk accords, it declared, “The essence of the proposal is to arrange an immediate ceasefire and grant separatists in east Ukraine broad autonomy in an area larger than previously agreed.”
German government spokesmen denied the report, however. The Süddeutsche Zeitung changed the article and posted a note explaining: “Territorial questions are not to be negotiated between Merkel, Hollande, and Poroshenko. However, political observers think it unlikely that demarcation lines set last September in the Minsk Agreement can be maintained, in light of separatists’ recent territorial gains.”
The British Guardian newspaper posted an editorial arguing that the Franco-German initiative was instead an opportunity to threaten to totally cut Russia off from the world financial system.
It wrote, “EU sanctions thus far have had a virtually symbolic impact. Cutting Russian banks and companies from the Belgium-based Swift international transaction system would, by contrast, impose a serious jolt. It could be done quickly, but then also rolled back rapidly. It has worked before, against Iran, which entered nuclear negotiations soon after being banned from Swift in 2012. ... When Mrs. Merkel and Mr. Hollande head for Moscow, they should put Swift on the table.”
Kerry, who was slated to discuss US arms deliveries to Kiev with Poroshenko, said President Obama is reviewing all options, including “providing defensive [weapon] systems to Ukraine.” He proposed, however, that Russia fall in line with US policy and adopt “a diplomatic solution that is staring everybody in the face.”
He demanded that Russia abandon the east Ukraine separatists: “Russia needs to demonstrate its commitment to ending the bloodshed once and for all. And we would ask that it does so by honoring the agreement that it signed, the Minsk agreement ... There must be an immediate commitment now to a real ceasefire which is not just a piece of paper and words, but which is followed up by specific actions.”
Kerry hailed “unity” between the United States, Germany, and France as ensuring that conflict could be overcome.
Amid the flurry of vague and contradictory proposals, however, it is unclear to what extent Washington and the European powers are coordinating their initiatives, or whether they have well-defined policies. French officials told Le Nouvel Observateur that Merkel’s and Hollande’s trip had not previously been discussed with Washington; however, it is not yet clear whether the Franco-German initiative is in fact in conflict with whatever policy the US government will ultimately pursue.
There are also conflicts within the United States itself. Republican Senator John McCain gathered a bipartisan group of 12 US senators yesterday on Capitol Hill and announced that if the White House does not arm Kiev, they would draft legislation requiring the US government to do so.
Kerry indicated that the Obama administration would make this decision sometime next week, following a visit from Merkel to Washington. The EU is also set to consider new sanctions against Russia next week.
What is clear is that the civil war in Ukraine has placed the world on the verge of catastrophe. According to the French president and his warnings about “total war,” Europe is closer to world war than it has been at any time since the outbreak of World War II in 1939.
Responsibility for the immense dangers facing the world population lies primarily with the United States, Germany, and all the NATO powers. The current crisis was provoked by the decision of Washington and Berlin to organize the coup last year, installing a right-wing government lacking any popular support, through a putsch led by pro-Nazi, anti-Russian forces such as the Right Sector militia.
Nothing that Washington or its European allies say can be taken at face value. While Hollande pledged himself as a “friend” of Russia, Kerry declared in Kiev, “We don’t view this as a zero-sum game. We have never viewed it that way. This is not meant to be nor should it be a divide between East and West.”
In fact, as Hollande and Kerry spoke these words, preparations for a far broader military confrontation between the NATO powers and Russia continued apace. A summit of NATO defense ministers in Brussels was setting up the infrastructure for NATO rapid reaction forces to number in the tens of thousands of troops, to be deployed in Eastern European countries all along Russia’s western border. (See: “NATO doubles combat forces in Eastern Europe”)
A major factor behind the calculations of Paris and Berlin, as they suddenly propose a truce, is the rapidly deteriorating situation of the Kiev regime. While they pursue military escalation elsewhere, Paris and Berlin have tactical objections that arming the Kiev regime is not a viable policy. As French diplomatic sources told the daily Le Monde, “The Ukrainians will not militarily retake the Donbass [region of east Ukraine], this strategy is doomed to failure.”
Having lost control of its position at the Donetsk airport, pro-Kiev militias in east Ukraine are surrounded and under heavy fire at the strategic transport hub of Debaltseve.
At the same time, Ukraine’s economy is collapsing due to the fighting in the key industrial regions in the east, and the cutting off of key Ukrainian export markets in Russia. Yesterday, as Kiev sought to negotiate the next tranche of Ukraine’s $17 billion IMF loan, it raised interest rates by fully 5 percent, to 19.5 percent, in an attempt to halt the hryvnia’s 46 percent slide against the US dollar.

US measles outbreak spreads to fourteen states

Kelvin Martinez

The Centers for Disease Control and Prevention (CDC) on Monday confirmed 18 new cases of measles in the US, bringing the total number of people infected with the disease to 102, in 14 states.
Measles cases have now been reported in Arizona, California, Colorado, Illinois, Minnesota, Michigan, Nebraska, New York, Oregon, Pennsylvania, South Dakota, Texas, Utah and Washington, according to the CDC. On January 26, when the CDC issued an advisory, the virus had only spread to six states besides California.
“ This is not a problem with the measles vaccine not working. This is a problem of the measles vaccine not being used,” said Dr. Anne Schuchat, assistant surgeon general and director of the National Center for Immunization and Respiratory Diseases, during a news conference Thursday.
Of the 34 people infected with measles for whom the California Department of Public Health had vaccination records, only five had vaccines, while one received just the first dose. National trends have confirmed this pattern, according to Dr. Schuchat.
On Monday, a daycare center at Santa Monica High School in Southern California was closed and more than a dozen infants were place on 21-day quarantine after a baby was found to have measles. The child was under a year old and too young to be vaccinated. Los Angeles County health officials ordered the “infant room” at the daycare center to be closed indefinitely. Among students at the high school, 7 percent have waivers exempting them from the measles vaccine, while district-wide, 11.5 percent have waivers citing personal or religious beliefs.
Last year, the United States saw the highest number of reported measles cases in 20 years, with 644 cases as part of 20 separate outbreaks. The spread of the virus was related to a massive measles outbreak in the Philippines.
Measles is a highly contagious and airborne disease that can linger in the air long after an infected person has left a room. According to the CDC, one infected person will spread the disease on average to 18 other people. About one to two people out of every 1,000 infected will die.
In the decade leading up to the 1963 licensure of the measles vaccine, the US suffered an average of 549,000 cases of measles and 495 deaths every year, with the number of unreported cases estimated to be 3 to 4 million, according to the CDC.
In 2000, the disease was proclaimed to be nearly eradicated in the US, but has since made a comeback. From 2001 to 2011, a total of 911 cases were reported, averaging 62 cases a year.
Over the years, the number of cases has risen. In 2014, the CDC reported 644 cases of the measles, and more than 100 cases have been reported this year alone.
“ Outbreaks of measles most commonly occur in communities with pockets of persons who were unvaccinated because of philosophic or religious beliefs,” the CDC said in a statement. “Pockets of unvaccinated persons also occur in states with high vaccination coverage, highlighting the importance of state health departments assessing measles susceptibility at the local level.”
In 2000, the world rate of children who had received at least one vaccination before their first birthday was estimated to be 73 percent, according to the World Health Organization. By 2013 the rate grew to 84 percent, leading measles deaths to drop by 75 percent from an estimated 544,200 in 2000 to 145,700 in 2013. On average, 400 people die every day from measles.
Between 2000 and 2013, the WHO estimated that 15.6 million measles deaths were avoided because of the vaccine, a number roughly equal to the combined populations of New York City, Los Angeles, Chicago and San Francisco.
Dr. Anne Schuchat told a House Energy and Commerce subcommittee this week that “measles are literally a plane ride away” and when people are not vaccinated, the disease “has the chance to spread.” She added, “Vaccines save lives and are the best way for parents to protect their children from vaccine preventable diseases.”

Canada’s Conservatives launch sweeping assault on democratic rights with new anti-terror bill

Roger Jordan

The anti-terrorism bill Canadian Prime Minister Stephen Harper unveiled last Friday contains measures signifying a vast intensification of the drive to abrogate democratic rights and establish the scaffolding for a police state.
Making the announcement in front of Conservative Party supporters rather than in parliament, Harper presented plans that will see Canada’s premier spy agency, the Canadian Security Intelligence Service (CSIS), freed from virtually any legal restraint in its day-to-day work.
Bill C-51 provides for CSIS to act in violation of domestic and foreign laws in its intelligence gathering practices and surveillance of suspects.
This is combined with a vast strengthening of the authority of CSIS to take action against terrorist suspects, including measures to disrupt alleged terrorist activity. According to information released by the government, it is no longer acceptable that “CSIS does not have a legal mandate to take action concerning threats. Instead, CSIS is limited to collecting and analyzing information and intelligence, and advising the Government of Canada.”
Under the new bill, CSIS operatives will be empowered to break the law and violate the Canadian constitution’s Charter of Rights, if they have “reasonable grounds” for believing that a threat is posed to Canada’s national security and have obtained court authorization. This is a lower level of legal evidence than would be expected in an investigation by law enforcement officials with the power of arrest.
If a court gives its assent, CSIS agents will be able to perform numerous illegal acts, including breaking into suspects’ homes, seizing and copying documents, and installing or removing “anything.” The only limitations are that CSIS cannot kill or physically harm someone or “violate” their “sexual integrity.”
The government is presenting these powers as a response to the threat of terrorist attacks.
But the legislation is worded in such a way that it empowers CSIS agents to disrupt not only terrorist activity and plots but rather all “threats to the security of Canada.” These include “espionage, sabotage, foreign influenced activities, terrorism and domestic subversion (activities against the constitutionally established system of government in Canada).”
The court oversight proposed by the Harper government would be limited to a judge signing off on these activities in advance. Thus, in effect, the courts would be providing CSIS with a blank cheque to act as it saw fit, with no further review after the fact.
With Bill C-51, the government has abandoned even the limited separation of intelligence work from law enforcement operations adopted by the Canadian ruling elite in the 1980s following damaging revelations about the activities of its security agencies. CSIS was founded in 1984, after a public inquiry uncovered systematic law-breaking and intimidation on the part of the Royal Canadian Mounted Police’s (RCMP) Security Service, CSIS’s predecessor. The Security Service employed violence, break-ins and arson, among other illegal techniques, against political parties and leftists, especially socialists and trade unionists.
The reformed framework did nothing to prevent CSIS from obtaining vast surveillance powers, such as spying on the population’s telephone and online communications, and systematically violating legal restrictions, illustrated most notably by the revelation that CSIS deliberately lied to the courts over several years about its spying practices.
The bill also broadens the definition of terrorist offences by criminalizing the act of “advocating” or “promoting” terrorism in general. Currently, the promotion of a specific act is required for an offence to be committed.
The new provision is patently aimed at targeting political opponents of the government’s embrace of militarism in Canadian foreign policy. Just last week, Harper implied that the leader of the opposition New Democrats, Thomas Mulcair, was a supporter of Islamic State in a parliamentary exchange in which Mulcair raised questions about the government’s deployment of special forces in Iraq. Harper told parliament, “I know that the opposition thinks it is a terrible thing that we are standing up to the jihadists. I know they think it is a terrible thing that some of these jihadists got killed when they fired on the Canadian military.”
If this is the response to those, like the NDP, who merely differ with the government over the tactics to be pursued in upholding Canadian imperialism’s interests, it is not hard to imagine what the reaction would be to the emergence of a genuine anti-war movement in the working class.
Provisions are also to be strengthened for facilitating the seizure and removal of material from the Internet considered to be encouraging terrorism. A court will be able to order the removal of articles, pictures or videos from websites that it deems to be “terrorist propaganda.” Information published on Harper’s website confirmed that this law was directly inspired by Britain’s example, where authorities are able to block “extremist” material online.
Bill C-51 will, in addition, expand the power of the RCMP to detain individuals without charge. It would allow suspects to be detained for up to seven days and expands the “peace bond” scheme, whereby suspects who have neither been convicted nor charged with an offence are compelled to give up their passports and banned from travelling abroad. The maximum period is currently two years. Bill C-51 would lengthen it to five years.
Judges would also have the authority to impose other conditions on suspects, such as reporting regularly to police officers or electronic tagging. Indicating the vague character of suspicion that would be necessary before adopting such measures, the government declared that they would be aimed at those “who may in some way be connected to carrying out a terrorist activity.”
The level of suspicion necessary to make an arrest will also be reduced from the current requirement that a “terror act will be carried out” to the much more vague belief that a terrorist attack “may be” in preparation. In the course of their investigations, government agencies will be permitted to share data on any individual.
Harper justified these draconian measures as necessary in the face of the grave threat posed by Islamist terrorism. In keeping with his repeated portrayal of Canada as a nation under siege from terrorists, he declared last Friday, “Our government understands that extreme Jihadists have declared war on us, on all free people, and on Canada specifically. Our government will continue to protect the rights and safety of all Canadians.”
In reality, the government is pursuing a very different agenda with this latest legislative package. Firstly, it is seeking to exploit the climate of fear whipped up by the claim that Canada is under attack to win support for Ottawa’s growing involvement in the predatory war in the Middle East led by US imperialism.
Domestically, the terrorist legislation is aimed at suppressing all opposition among workers to the government’s unpopular policies of war abroad and attacks on social and democratic rights at home. Bill C-51 is only the latest in a raft of repressive measures instituted by successive governments led by the Conservatives and opposition Liberals since the 9/11 terrorist attacks. These include an all-embracing definition of terrorism, which could cover protests and strikes by workers, mass surveillance of the population by CSIS and the RCMP, and powers to compel witnesses to testify in terrorism trials. In December, parliament adopted Bill C-44, granting blanket legal anonymity in court to CSIS informants, and sanctioning CSIS’s spying on Canadians outside the country.
This reactionary drive also feeds in to the Conservatives’ strategy for the upcoming federal election, which it intends to fight on an overtly right-wing basis by casting the opposition as soft on terrorism and incapable of carrying out the ruling elite’s demands for deeper attacks on the working class.
The opposition Liberals and New Democrats will offer no principled opposition to this programme. Liberal public safety spokesman Wayne Easter remarked, prior to the presentation of the new law, that the Liberals were “very open to what the government will propose.” Noting that his party’s only real complaint was a lack of parliamentary oversight, he left no doubt of his fundamental agreement with expanded state powers, asking, “One key question is: why have current laws not been utilized to the full extent we think they should be?

Mistreatment of detainees and asylum seekers widespread in Europe

Jean Shaoul

A report by the Council of Europe’s Committee for the Prevention of Torture (CPT) details the shocking abuse and mistreatment of detainees, particularly asylum seekers and juveniles, in some of Europe’s detention centres. It warns that prison guards had carried out reprisals against detainees who had spoken about their ill treatment to the CPT.
The CPT visited detention centres in 25 of the 47 members of Council of Europe to examine conditions relating to the treatment of detainees. These included prisons, police stations, holding centres for immigration detainees, psychiatric hospitals, and social care homes.
Its findings are contained in 24th General Report of the CPT: European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (1 August 2013-31 December 2014).
The CPT drew attention to the mistreatment of asylum seekers, saying that they were being held in conditions that were both inhumane and degrading, particularly in Spain, Italy and Greece, which take in the largest number.
In Greece, migrants were being held in police stations all over the country for long periods. The report cited the example of Perama Police Station in Piraeus, where two or more women were held for months in a dark, mouldy and dilapidated basement cell measuring just 5 square metres, with no access to outdoor exercise or hygiene products.
Greece’s austerity measures had affected the most vulnerable members of society. There was an extreme shortage of staff, and overcrowding at prisons was widespread. Prisons were operating at two or three times their capacity, prisoners were sharing beds or sleeping on mattresses on the floor, and there was a serious lack of hygiene and access to health care. At Korydallos Men’s Prison, a wing of some 400 inmates was staffed by only two prison officers during the day, leading to mistreatment, bullying and intimidation by police officers.
The detention and mistreatment of asylum seekers is becoming a growing issue throughout Europe.
In Britain, for example, around 30,000 asylum seekers—nearly one third of them women and children—are detained every year, and the number is growing. They are isolated from the outside world, allowed only one visitor, and confined, without time limit, until their asylum cases are heard. It is not uncommon for asylum seekers to be held for as long as a year until their cases are heard. If their appeal is rejected, they are deported immediately without regard for their safety. They have no right to health care or legal aid.
A report into Britain’s Yarl’s Wood Immigration Removal Centre, which holds more than 400 female asylum seekers, found that nearly three quarters of the 46 women interviewed had been raped, while 41 percent had been tortured. More than half said they had been persecuted for being a woman, while 18 percent had been persecuted for their sexuality.
Such treatment is bound up with the policy of “Fortress Europe” pursued by the European Union’s member states: the sealing off of the continent from the flood of refugees, the result in large part of Europe’s support for the US wars of aggression against Afghanistan, Iraq and Libya, and covert operations in Somalia, Syria, Yemen and elsewhere.
The CPT also expressed its concern about the situation confronting those under 18 years of age. It said that the deliberate ill treatment of juveniles by law enforcement officials remained a real concern in a number of countries.
There were credible allegations of detained juveniles being ill treated, including being kicked, slapped, punched or beaten with batons at the time of apprehension (even after the juvenile concerned has been brought under control), during transportation or subsequent questioning in law enforcement establishments. It was not uncommon for juveniles to become victims of threats or verbal abuse (including of a racist nature) while in the hands of law enforcement agencies.
It recommended that juveniles should not be subject to police questioning without a lawyer or trusted adult, held in law enforcement establishments for more than 24 hours, housed in large dormitories or placed in solitary confinement as a disciplinary measure. That the CPT should make such recommendations speaks volumes for the conditions its investigators observed.
Of great concern to the CPT was that their previous reports had been ignored, some of their previous recommendations had not been implemented, and prisoners or detainees who spoke with their investigators faced reprisals from guards.
Reprisals took the form of undue restrictions on basic entitlements, solitary confinement for fabricated disciplinary or security reasons, placement in worse conditions of detention, withdrawal of support for early release, assault and other kinds of ill treatment. This had occurred in Armenia, Azerbaijan, Bulgaria, Greece, Hungary, Moldova, Russia, Spain, the former Yugoslav Republic of Macedonia, and Ukraine.
One prisoner in Ukraine had allegedly been subjected to severe beatings after the CPT’s previous visit to the establishment and been made to shout to other inmates—while he was being beaten—that he would never again complain to the CPT. The CPT, which has no powers of sanction, called on the authorities to prevent the risk of further intimidation and to protect witnesses and “whistle-blowers.”
CPT President Letif Hüseynov said, “Intimidation or retaliation against persons the CPT has interviewed may not only violate their human rights but also strikes a blow to the preventive mechanism established by the European Convention for the Prevention of Torture.”
The CPT report has attracted little media attention—only Deutsche Welle reported it—and no public response at all from the political authorities responsible for this terrible state of affairs.

Australian central bank cuts rates as economic downturn accelerates

Nick Beams

The Reserve Bank of Australia (RBA) yesterday cut its base interest rate by 0.25 percentage points in a move that reflects both the intensifying global currency war and the rapidly worsening state of the Australian economy.
The RBA’s cash rate is now at an historic low—even below the level recorded in the depths of the 2008–2009 financial crisis. The Australian dollar fell to just above 76 US cents, its lowest point for more than five years, on the back of the news, amid predictions that further interest rate cuts will be made in coming months.
The RBA decision points to the deepening global downturn. In little more than a month since the start of the year, some 12 countries have now taken action, whether by cutting rates or other measures, to try to lower the value of their currencies as the struggle for markets intensifies and global growth declines.
Australia has been heavily impacted because of precipitous falls in commodity prices, most notably the halving of the price of iron ore, its leading export earner. The terms of trade, a measure of the relative value of exports compared to imports, have fallen by 25 percent over the past three years, leading to a contraction in real gross domestic income over the past half year. Real wages have contracted for the first time since 1991–92.
Having not experienced an official recession—defined as two consecutive quarters of negative growth—for almost a quarter of a century, Australia is now being sucked into the vortex created by the ongoing breakdown of the global economy that began in 2008.
Announcing the decision, RBA governor Glenn Stevens, who has advocated a lower Australian dollar in order to try to boost growth, pointed to two key motivating factors.
He said that while the Australian dollar had declined “noticeably against a rising US dollar in recent months,” its fall against a basket of major currencies was much less marked and it remained “above its fundamental value.” This is particularly significant because other central bankers have insisted that their rate cuts have not been aimed at reducing the value of their currency—such a policy being condemned as an expression of the beggar-thy-neighbour measures that characterised the 1930s.
Bank officials have generally tried to cover their tracks by citing the need to prevent the emergence of deflation. But with the inflation at or near 2 percent in Australia no such obfuscation was available to Stevens. He had to admit that the rate cut was specifically aimed at reducing the value of the Australian currency.
Stevens’ statement pointed to the rapidly worsening position of the Australian economy. Growth remained at “below trend pace, with domestic demand growth overall quite weak.” The major component of the weakness is the downturn in domestic investment as businesses anticipate stagnant or contracting markets.
Stevens said output growth would remain below trend and unemployment, now at 6.3 percent, would continue to rise.
This is in marked contrast to RBA forecasts made as recently as last November. Then it said that 2015 was likely to bring a recovery with growth rising from its level of 2.3 percent to 3.5 percent and possibly reaching 4.25 percent by the end of 2016.
As Business Spectator columnist Alan Kohler noted: “Taken at face value, the RBA has made a total reassessment of its view of the economy and concluded that things are not going that well—worse apparently than the statistics are telling us.”
He said the RBA had decided to “don the camouflage suit and tin hat and race out into the currency war battlefield, guns blazing.”
The RBA’s “total reassessment” is an expression of the ongoing downward assessment of the state of the global economy. According to Australian Treasurer Joe Hockey, the International Monetary Fund is about to release fresh forecasts on global growth expressing “further concern about some of the headwinds we are facing.” Just two weeks ago the IMF downgraded its forecast for global growth from 3.8 to 3.5 percent, but it now appears that even that was too optimistic.
Hockey’s warnings about IMF growth revisions made total nonsense of his claim that the RBA cut was “good news for families and small businesses” and “good news for the economy and … good news for jobs.”
In fact, the only beneficiaries will be the financial speculators—share prices rose to their highest levels since the financial crisis of 2008 following the RBA announcement—and real estate and property investors. In other words, the major economic outcome of the decision will not be real growth but ever-increasing financial parasitism and the further enrichment of the super-rich, together with widening social inequality.
Contrary to Hockey, the decision was made because RBA considers that, having held interest rates steady for the past 18 months, the economic outlook is now rapidly worsening, a downturn which has firmly taken hold since its assessment barely two months ago.
Hockey’s bizarre remarks are an indication of the underlying economic forces driving the growing political crisis which has gripped the Abbott Liberal government. On the one hand, it is faced with demands from the corporate elites, articulated in numerous editorial comments, especially in the Murdoch press, that, under worsening economic conditions, it press ahead with an austerity program aimed at lowering the living standards of the working class.
On the other hand, these attacks have produced a growing wave of opposition which last weekend led to the ousting of the Queensland state Liberal National Party government. Premier Campbell Newman, who lost his own seat in the debacle, had exhibited exactly the kind of “strong” leadership advocated in the editorial columns, casting a pall of doubt over the future of the federal government.
In an attempt to deflect growing criticism of his leadership, Abbott used his National Press Club address on Monday to assure the corporate elites that he was remaining firm, while warning his opponents within the party that any attempts to remove him would make the position of the government even worse. His stand, however, has so far failed to end the leadership turmoil.
A measure of the mounting frustration in ruling circles over the worsening economic position and the increasing difficulty of securing their agenda through parliamentary forms of rule was the editorial published in today’s Financial Review criticising the RBA decision.
“Fiscal policy is off the rails,” it declared. “Politics is a mess, with the instability of the Rudd-Gillard years infecting the Abbott government. There has been no major productivity-enhancing policy reform since the GST [the regressive goods and services tax] a decade and a half ago. Our national prosperity is receding as iron ore and coal prices slump. And now, the one upright institution—and the one credible and coherent policy lever—monetary policy—are bending under the pressure of policy failure elsewhere.”
The response of the working class to this deepening economic and political crisis must be to begin to advance its own independent program, based on socialist internationalism, and the building of a new leadership to fight for it.

Washington moves toward arming Ukrainian regime

Niles Williamson

On Monday, the New York Times announced that the Obama administration is moving to directly arm the Ukrainian army and the fascistic militias supporting the NATO-backed regime in Kiev, after its recent setbacks in the offensive against pro-Russian separatist forces in east Ukraine.
The article cites a joint report issued Monday by the Brookings Institution, the Atlantic Council, and the Chicago Council on Global Affairs and delivered to President Obama, advising the White House and NATO on the best way to escalate the war in Ukraine.
The think-tank report calls for the US to distribute at least $3 billion in military equipment to the Kiev regime over the next three years. Among the equipment proposed for delivery are light anti-armor missiles, counter-battery radars to target artillery and rocket launchers, medium range drones and armored Humvees. They also call on NATO member states in Eastern Europe with former Soviet equipment to provide weapons and equipment to Kiev.
According to the Times, US officials are rapidly shifting to support the report’s proposals. NATO military commander in Europe General Philip M. Breedlove, Defense Secretary Chuck Hagel, US Secretary of State John Kerry, and Chairman of the Joint Chiefs of Staff General Martin Dempsey all supported discussions on directly arming Kiev. National Security Advisor Susan Rice is reconsidering her opposition to arming Kiev, paving the way for Obama’s approval.
Behind the backs of the American people, Washington is recklessly escalating a conflict that threatens to provoke war with Russia. Offensives by Ukrainian fascist militias such as the Right Sector or the Azov Battalion have already led to the deaths of more than 5,000 people and forced over a million to flee their homes. Russian officials have repeatedly stated that they will intervene militarily to halt a bloodbath by Kiev regime forces in east Ukraine—a move that could trigger a global war between Russia and Ukraine’s NATO allies.
The way the report was assembled testifies to the utterly anti-democratic fashion in which US foreign policy is determined. The think-tank report, which the Times ludicrously described as “independent,” was authored by a cabal of former high-ranking Pentagon, NATO and State Department officials. Behind the backs of the American people, a policy is being set into motion that could trigger war between nuclear-armed countries including the United States and Russia.
In fact, the institutions and individuals that issued the report have close ties to the Obama administration and the Democratic Party. First Lady Michelle Obama sits on the board of directors of the Chicago Council.
Among those who signed off on the report, one finds:
Strobe Talbott, current President of the Brookings Institution, who served as Deputy Secretary of State in the Clinton administration and Ambassador-at-Large to the former Soviet Union. He oversaw the development of US policy toward Russia amid the Stalinist dissolution of the USSR, and early efforts to draw former pro-Soviet states in Eastern Europe and former Soviet republics in the Caucasus away from Russia. As President Bill Clinton’s closest advisor on Russia, Talbott supported Boris Yeltsin’s shelling of the Russian parliament in 1993, resulting in the deaths of hundreds of people.
Ivo Daalder, current President of the Chicago Council, was a foreign policy adviser to Obama during his 2008 presidential campaign and the US representative to NATO during the war on Libya in 2011. The bombing campaign led by the United States, France and Britain devastated Libya, killed tens of thousands and resulted in the lynch mob murder of Moammar Gaddafi.
Michele Flournoy currently chairs the Center for a New American Security think-tank and was the Under Secretary of Defense under Robert Gates and Leon Panetta from 2009 to 2012. She also served in the Defense Department in the Clinton Administration, formulating US policy on Russia, Ukraine, and Eurasia. She was considered a potential candidate to replace current Defense Secretary Chuck Hagel, who announced his resignation in November.
Two former US ambassadors to Ukraine, John Herbst and Steven Pifer, signed their names to the report. Significantly, Herbst was ambassador during the US-backed 2004-2005 Orange Revolution that brought to power a pro-Western government. In 2006, he secured $2.3 million in funding through USAID, a long-standing conduit for CIA funding and operations, to promote the development of pro-Western media in Ukraine.
In calling for such an escalation in Ukraine, the signatories are all following in the footsteps of former National Security Advisor to President Jimmy Carter, Zbigniew Brzezinski. Last year, Brzezinski delivered a speech at the Wilson Center laying out the policies now being advocated in the Brookings Institution report and discussed by the New York Times.
He called on Washington to provide Kiev with, “weapons designed particularly to permit the Ukrainians to engage in effective urban warfare of resistance. There’s no point trying to arm the Ukrainians to take on the Russian army in the open field, thousands of tanks, an army organized for the application of overwhelming force.” Instead, he proposed a policy of intimidating Russia and, if it decided to intervene in Ukraine anyway, bogging it down in urban ethnic warfare.
He explained, “There is a history to be learned from urban resistance in World War II and most recently in Chechnya, whose capital persisted for three months in house-to-house fighting. The point is, if the [Russian] effort to invade was to be successful politically, it would have to incorporate taking the major cities. If the major cities, say Kharkiv, say Kiev, were to resist and street fighting became a necessity, it would be prolonged and costly. And the fact of the matter is, and this is where the timing of this whole crisis is important, Russia is not yet ready to undertake that kind of effort. It will be too costly in blood, paralyzingly costly in finances.”
The strategy outlined by Brzezinski is sinister and reactionary. If US operations fail to intimidate Russia into ceding all influence in Ukraine and letting NATO proxies crush the Donbass, US weapons and equipment would be used to bleed Russia white in a war fought inside cities that are home to millions of people, and that might escalate into full-scale nuclear war.

ISIS releases video of barbaric execution of Jordanian pilot

Will Morrow

The execution by the Islamic State of Iraq and Syria (ISIS) of captive Jordanian pilot Moaz al-Kasasbeh, depicted in a video published by the terrorist outfit and widely circulated on social media on Tuesday, is a barbaric and heinous act. The grisly 22-minute video, which shows al-Kasasbeh doused in gasoline kneeling in a cage then set alight, has provoked revulsion among ordinary people around the world.
ISIS captured al-Kasasbeh on December 24 when his plane crashed over northern Syria during a bombing sortie as part of the US air war. In exchange for his release, ISIS had demanded the release of Sajida al-Rishawi, an Iraqi women imprisoned for her role in a 2005 bombing attack in the Jordanian capital Amman. Jordan’s government signalled its willingness to make the trade, but demanded proof of life.
In response to the killing of al-Kasasbeh, the despotic Jordanian regime of King Abdullah II announced today that it had carried out its own barbarities—hanging al-Rishawi and one other prisoner at dawn. Other executions could follow. Armed forces spokesman Mamdouh al-Ameri declared that “the revenge will be as big as the calamity that has hit Jordan.”
The execution of the Jordanian pilot has again exposed the reactionary character of terrorism. The methods employed by ISIS express the fact that it does not represent the strivings of the oppressed masses of the Middle East for a way to end imperialist domination. Rather it represents sections of the Arab elite who are seeking a more favourable accommodation with the major powers.
As with previous ISIS killings, including the beheadings of American journalist James Foley and Japanese journalist Kenji Goto, the murder of al-Kasasbeh directly plays into the hands of imperialism. The US and its allies are already using the atrocity to justify the further expansion of their war in Iraq and Syria.
US President Obama told a press conference on Tuesday that the execution, if verified, would “redouble the vigilance and determination on the part of our global coalition to make sure that they [ISIS] are degraded and ultimately defeated.”
In reality, ISIS is the direct product of the illegal US-led invasion of Iraq in 2003, and the subsequent regime-change operation in Syria. ISIS and its forerunner, Al Qaeda in Iraq, which did not exist in Iraq prior to the 2003 occupation, gained support among the country’s Sunni minority due to the savage repression unleashed by the invasion and the sectarian atrocities carried out by the US-backed Shiite puppet government in Baghdad.
Washington and its allies provided funds, arms and training to ISIS as part of the US-backed efforts to oust the Syrian government of Bashar al-Assad. The US turned a blind eye to ISIS’s atrocities as long as it was part of the “democratic revolution” against Assad. Only when its militias moved into western and northern Iraq and threatened US interests did the Obama administration use ISIS as the pretext for a renewed intervention in Iraq and Syria.
Obama is facing mounting criticism within the American political and military establishment over his administration’s policy in Iraq and Syria and demands for an escalation and widening of the Middle Eastern war.
Republican Senator Lindsey Graham (South Carolina), who is a possible presidential nominee, used an appearance on last Sunday’s CBS show “Face the Nation” to call for a major increase in US troops on the ground from 2,300 to 10,000. Former Republican presidential candidate John McCain had earlier called for such an increase.
Graham bluntly declared that the real target of the expansion of US military forces would be the Assad government in Syria. “You cannot successfully defeat ISIL [ISIS] on the ground in Syria… until you deal with Assad,” he said. Both McCain and Graham have also called for the imposition of a no-fly zone over Syria, which would mark a further step toward the initiation of open war against the Assad government.
These comments followed a speech last week by Michael Flynn, the recently-retired director of the Defence Intelligence Agency, in Washington DC. According to the Daily Beast, Flynn denounced Obama’s strategy against ISIS as “paralysed,” and called for a decades-long US-led war against it. Flynn reportedly received a standing ovation from the assembled crowd of intelligence officers.
General Martin Dempsey, the chairman of the Joint Chiefs of Staff, declared in an interview on January 23 that the Authorisation for the Use of Military Force (AUMF) being sought by the Obama administration for its war in Iraq and Syria, should be unlimited in scope and duration.
“I think in the crafting of the AUMF, all options should be on the table, and then we can debate whether we want to use them,” he said. He added that “it shouldn’t constrain activities geographically, because ISIL knows no boundaries.” Moreover, any constraints on time, or a so-called “sunset clause,” were unnecessary.
Yesterday, Marine Lt. Gen. Vincent Stewart testified before the House Armed Services Committee, declaring that the threat of ISIS was growing and that the war in Syria “is trending in the Assad regime’s favour.” The implication of his remarks is that the war in Syria must not only be extended against ISIS, but openly targeted against Assad as well.
The US and its allies are already stepping up the war in Iraq and Syria. The Combined Joint Task Force announced yesterday that 14 airstrikes had taken place over a 24-hour period, following another 34 strikes during the weekend. On the ground, Al Jazeera reported yesterday that Iraqi government forces, led by the Badr Brigade—a Shiite militia notorious for sectarian atrocities—had recaptured the province of Diyala, killing unarmed civilians in the town of Barwana.
The Obama administration also announced yesterday that it would increase its annual aid to the Jordanian regime from $660 million to $1 billion for 2015–2017. Jordan has been a key ally in the US-led wars in the Middle East. The country has hosted bases used by the CIA to train Islamist fighters being sent to fight against the Assad government in Syria.
The escalating US-led war in Iraq and Syria is not about fighting terrorism but is aimed at securing American domination over the energy-rich Middle East, in the first instance through the ousting of the Assad regime. The military intervention, which has already destabilised the region, threatens to trigger a wider conflict with Assad’s backers—Iran and Russia—and to draw in other powers.

Oil slump triggers North Sea crisis

Steve James

The slump in the price of oil is a powerful symptom of capitalist breakdown. To protect market share during declining demand, the Organisation of Petroleum Exporting Countries (OPEC), the cartel of oil producing countries who together produce around 40 percent of global oil supplies, has agreed to maintain current production levels.
Demand for OPEC oil in 2015 is anticipated to be about 28.8 million barrels per day (bpd), compared with a production figure of 30 million bpd. As a result, there is a growing surplus of oil on the world market and prices are collapsing. Oil is selling for well under $50 a barrel, less than half the price six months ago.
Saudi Arabian officials, representing the most powerful OPEC country, have stated they will not cut production regardless of price “be it $40, $30, or $20 per barrel.” A former Saudi oil minister, Mohammed al-Sabban, boasted that the country could sustain low prices for “at least eight years ... to see those marginal producers move out of the market.”
The price collapse has made a host of projects and oil fields unviable. Shell has abandoned plans to build a huge petrochemical plant in Qatar, the Al Karaana project. Premier Oil is expected to postpone the $2 billion Sea Lion project off the Malvinas/Falkland Islands and the Beam project in the Norwegian North Sea. Statoil has given up exploration licenses in Greenland, one of the most expensive exploration zones, while Canada Natural Resources is cutting capital spending by about 25 percent. Exploration rig hire charges have fallen 25 percent. In total, Goldman Sachs reckoned, $930 billion of projects could be shelved.
One of the most exposed regions is the British sector of the North Sea. Production, which began in the 1970s, has been in decline since 1999, with a sharp slump following 2010. New discoveries tend, year by year, to be smaller, in deeper water, with more complex extraction. While new techniques have raised the percentage of recoverable oil, this is ever more costly. With oil at over $100 a barrel, advanced methods still allow huge profits to be recouped. At below $50, few North Sea fields, currently the most expensive offshore locations in the world, are profitable. By contrast, production in Saudi Arabia costs less than $10 a barrel.
An extended price slump poses an existential threat to much of the British North Sea-based industry, as exploration of smaller, deeper fields becomes unviable and existing fields run dry. In December, Robin Allan of the oil industry explorers’ association Brindex, told the BBC that North Sea exploration was “close to collapse.” Allan, a director of Premier Oil, complained that even at $60 a barrel, exploration was unprofitable.
The slump destroys the Scottish National Party’s (SNP) mendacious perspective of an independent capitalist Scotland, so awash in oil revenue that the austerity policies imposed by the British and Scottish governments since the initial financial breakdown of 2008 could be reversed. At current prices, according to the British government’s Office for Budget Responsibility, tax revenues accruing from oil annually would be as little as £1.25 billion, in contrast to the SNP’s forecasts of some £6.9 billion.
The 2014 referendum on Scottish independence featured repeated spats over the amount of oil revenue that would come Edinburgh’s way in the event of a “Yes” vote. The SNP, leading the “Yes” campaign with the assistance of the pseudo-left groups, bombarded working class areas with promises that families would be thousands of pounds richer.
With the vote safely over and prices plummeting, SNP Energy Minister Fergus Ewing complained that the threat to the oil industry was creating “the most serious jobs situation Scotland has faced in living memory.”
Labour’s new leader in Scotland, Jim Murphy, agreed, warning, “The oil crisis is the biggest threat to jobs in Scotland since Ravenscraig.” The 1992 closure of the Ravenscraig steelworks indirectly cost up to 10,000 jobs. In Aberdeen, 13 percent of all jobs are oil-related and the northeast of England hosts a number of production sites, but oil-related jobs are scattered across the UK. In total, estimates of oil-related jobs in the UK run as high as 450,000. Of these, 35,000 are said to be imperiled, including 16,000 in Scotland.
In response, and seeking to defend the industry’s profit margins, the British and Scottish governments, in league with the oil corporations, are pursuing three angles.
Firstly, every party is calling for a sharp reduction on the level of corporation tax paid from oil production. The benchmark figure has been set by the industry lobby group Oil & Gas UK, whose boss, Malcolm Webb, wants the top rate of North Sea tax cut from 80 percent to 30 percent. There is cross-party agreement that a supplementary tax rate should be cut by around 10 percent. The SNP, led by newly-installed Scottish First Minister Nicola Sturgeon, is calling for tax cuts immediately, without waiting for the British Chancellor George Osborne’s next budget in March.
Secondly, there is all-party support for the implementation of the Wood Review. Ian Wood, billionaire and retired founder of the oil services Wood Group PSN, was hired to report on the options to maximise the life of oil fields in the UK’s continental shelf. Wood’s review warned that the “light touch” regulation of the early years of North Sea exploitation—for “light touch”, read dangerous scramble—had led to a situation where there are now over 300 oil fields of varying sizes competing for access to an aging and badly organised infrastructure. Wood called for an industry-backed regulator to ensure the most efficient and profitable exploitation of remaining resources, estimating that while 42 billion barrels of oil equivalent have been drawn out of the seabed, another 12-24 billion barrels could be available.
Thirdly, industry is also cranking up the exploitation of its workforce, while reducing its size. The industry centred on Aberdeen now has interests far beyond the North Sea, including Central Asia, Brazil and West Africa, and is worth up to $52 billion . To retain its global influence, costs—mostly wages—have to be driven down.
In response to the fall in oil prices, a wave of job losses was announced in the industry globally.
Oil industry trade unions in Scotland, despite verbal grandstanding, have a long record of doing nothing to fight job losses. Their main aim is to ensure the competitiveness of the oil industry. The Rail Maritime and Transport union (RMT) has endorsed the all-party consensus for tax breaks, with spokesman Jake Molloy insisting, “This is about sustaining oil and gas production from the North Sea ... and keeping the economy buoyant beyond May.”
Mick Cash, RMT general secretary, claimed, “We will be pushing for a halt to the job cuts programme and an emergency package of measures to stave off the destruction of both jobs and infrastructure.”
This is hot air, with the union’s main concern being, in Cash’s words, that firms presently have only “a short-term slash-and-burn approach that will have long-term implications for the future of the entire industry and the security of the UK’s energy supplies.”
The declaration that the RMT would fight job cuts followed the announcement by BP that 300 jobs would go at its North Sea operations. Following Cash’s statement, Talisman Sinopec said it would shed 300 jobs.

Former Maldives president mounts challenge to government

Wasantha Rupasinghe

In the wake of a visit to Sri Lanka last month, Maldives’ opposition leader Mohamed Nasheed is seeking to form an alliance to take control of the parliament (Majlis) and oust President Abdulla Yameen.
Nasheed’s trip to Colombo was significant as it came just one week after the Sri Lankan presidential election in which Maithripala Sirisena defeated the incumbent, Mahinda Rajapakse. Sirisena, whose candidacy was engineered with US support, is rapidly reorienting Sri Lankan foreign policy away from Beijing and towards Washington.
Nasheed is apparently looking for Western backing to bring about a similar shift in the Maldives. His Maldives Democratic Party (MDP) is about to sign a formal alliance with the Jamhooree Party (JP), which was a major partner in the ruling coalition until last June. President Yameen’s Progressive Party of Maldives (PPM) currently has 49 of the 85 seats in the country’s parliament while the MDP and JP have 22 and 13 seats respectively.
In a similar manner to Sirisena in Sri Lanka, Nasheed is now campaigning to “defend the constitution and democracy” against Yameen’s allegedly autocratic methods. The MDP has criticised the president for removing two pro-opposition Supreme Court judges and sacking the country’s auditor general arbitrarily. However, the opposition’s real target is the close relationship that the government has developed with China.
Nasheed, who became the country’s first elected president in 2008, resigned in 2012 amid mounting opposition protests particularly over his attempt to arrest the chief justice. Nasheed claimed he had been removed by the military in a coup. Vice President Mohamed Waheed Hassan took over as president.
Nasheed won the delayed presidential election in November 2013, but the supreme court annulled the result amid opposition claims of vote rigging. In the next round, Yameen narrowly won with the backing of all opposition parties.
The political turmoil in the Maldives, with a population of just 300,000, is closely bound up with rising geo-political tensions. The collection of islands off the tip of India is strategically located across major sea lanes in the Indian Ocean—midway between Strait of Malacca to the east and Suez Canal to the west. India considers the Maldives as part of its sphere of influence.
The US has been seeking to strengthen its influence in the Maldives at the expense of China as part of the Obama administration’s “pivot to Asia.” Washington signed an Access and Cross Service Agreement with the Maldives with the Nasheed government in 2010. In 2013, information leaked out that the Pentagon had been in negotiations with the Maldives for a Status of Forces Agreement to open the way for basing arrangements, but Yameen, on assuming office, blocked the move.
Nasheed used his visit to Sri Lanka last month to underscore his pro-Western orientation and again criticise Yameen for orienting to China. In an interview with the Daily Mirror, he declared: “We can’t isolate ourselves and move ourselves away from the outside world. It doesn’t work like that. We must have good relations with the West as much as with East.”
Nasheed accused the Maldivian government of “giving more room to China,” saying: “We want a new Maldivian government to work more closely with the Sri Lankan government and synthesise their foreign policy.” He was one of the first high-profile foreign visitors to meet with the leaders of the new Sri Lankan government—President Sirisena and Prime Minister Ranil Wickremesinghe—who are shifting firmly into the US camp following the January 8 election. He also met with European diplomats including the German ambassador to Colombo.
In an interview on Sri Lanka’s MTV channel broadcast on January 31, the interviewer asked Nasheed to respond to the accusation that he was acting on the “whims and fancies” of Britain and the US. Nasheed replied: “We should not be removed from the international world we live in... What happens in Sri Lanka has a strong impact in the Maldives.”
Nasheed added that because the Maldives relied completely on Europe for foreign trade and tourism, “We must have an amicable relationship with these people.” The European Union is the largest market for fish exports from the Maldives and also accounts for over half of the tourists who visit the island archipelago. Tourism is the country’s largest foreign exchange earner.
The US and India are both concerned about growing Chinese influence in the Maldives. Waheed Hassan, who took over from Nasheed in 2008, turned to China for financial assistance. He cancelled a contract signed with the Indian company, GMR, to construct the Male International Airport, straining relations between two countries.
After Yameen came to power in 2013, the tilt towards China became more pronounced. Last September, Xi Jinping became the first Chinese President to the Maldives as part of his South Asia tour. Xi signed nine agreements, including an upgrade of the Male airport. During the visit, Yameen also agreed to join China’s Maritime Silk Road (MSR) initiative aimed at securing Beijing trade and influence across the Indo-Pacific.
Speaking on the country’s independence day in November, Yameen criticised “Western colonial powers” and praised China for not imposing “compulsions” on the Maldives.
Nasheed has responded by stirring up anti-Chinese sentiment. He recently accused the government of planning to sign the MSR agreement and “hand over large parts of Laamu Atoll to China for the establishment of a military base for 99 years in return for US$2 billion.” The Chinese embassy quickly denied the claim, saying that China “does not maintain any military in any foreign country.”
On his return to the Maldives, Nasheed is seeking to build momentum for the removal of the government. On January 20, Yameen sacked Defence Minister Mohamed Nizam for unspecified reasons. Nizam was key player in the manoeuvres that led to Nasheed’s ouster in 2012. However, the opposition MDP has defended him and Nizam, in turn, has declared he will support anti-government campaign.
The Maldives Trade Union, which has been formed in May 2014 to protect small- and medium-sized businesses, has also decided to join the MDP-initiated campaign. JP deputy leader Ibrahim Ameen has called on “individuals, NGOs and political parties to join the cause of defending the constitution.”
While there has been no overt Western support for the opposition, Nasheed undoubtedly used his trip to Sri Lanka sound out backing from the US and the EU.

US spy bases in Australia central to war plans against China

Will Morrow

An article published on January 23 in the Fairfax-owned Australian Financial Review, the country’s preeminent business newspaper, calls attention to the complete incorporation of the Australian military and intelligence apparatus into the global operations of the US armed forces.
The article was written by Richard Tanter of the Nautilus Institute for Security and Sustainability, in collaboration with Max Suich, the former editorial executive of Fairfax media. It focuses on the critical international role of four joint US-Australian spy bases, which, in all but name, are operated as American facilities, jointly funded by both governments.
Tanter makes clear that the bases are at the very centre of Washington’s preparations for a war with China, including US plans for a nuclear first-strike.
The article underscores the far-reaching implications of Australia’s total alignment—begun under the previous Greens-backed Labor government and continued under the current Coalition government of Prime Minister Tony Abbott—with the Obama administration’s “pivot to Asia.” The “pivot,” which was formally announced by Obama on the floor of the Australian parliament in November 2011, involves a comprehensive drive on all fronts—diplomatic, economic and military—against China.
Behind the backs of the population, Australia has been placed on the frontline of US strategic planning for war with China. Such is the country’s integration into these preparations, that in the event of war between the US and China, Australia would also be at war. As Tanter writes, Beijing and Washington “now spend considerable time thinking about the war with each other. From a Chinese perspective, Australia is not so much hosting US military bases, but is a virtual American base in its own right.”
In particular, the bases would provide targeting information for a devastating US pre-emptive strike—that could include nuclear weapons—on China’s nuclear missile arsenal and satellite communications systems, as well as for America’s anti-missile systems designed to neutralise any of China’s remaining weapons.
The most strategically significant of the bases is the Joint Defence Facility Pine Gap, first established near Alice Springs in central Australia in 1970. It is currently staffed by up to 800 personnel, the majority of them American. It is one of just three global “control and command” stations for data sent by US satellites which maintain a geosynchronous orbit over the earth’s equator. The other two are at Buckley Air Force Base in Colorado, and Menwith Hill in Yorkshire, Britain.
The Financial Review article confirms what had already been reported, that Pine Gap provides “telephone intercepts and location intelligence” for the Obama administration’s criminal program of drone assassinations in the Middle East, including in Yemen and Pakistan, which have killed thousands of civilians. The Australian political establishment is deeply implicated in these war crimes.
According to Tanter, over the last 15 years, the facility has been upgraded with new antennas for processing data from US thermal imaging satellites, which are able to “instantaneously detect the heat blooms of missiles.”
The data from Pine Gap underpins the US-Japanese ballistic missile defence system in the western Pacific Ocean. “With that data,” Tanter writes, “the American and Japanese Aegis-class destroyers and their powerful radars, plus their land equivalents, have a reasonable chance of guiding their own missiles onto the incoming enemy missiles ...” Pine Gap will “also provide the information as to which enemy missile silos are now empty, and which should be targets in a US second strike.”
In addition to Pine Gap, Washington is systematically building up its network of bases across the country. The North West Cape facility in Western Australia has recently become a joint US-Australian facility after having previously been handed back to Australian control. It now forms a central component of Washington’s planning for outer-space warfare, or what Tanter terms “full spectrum dominance in space.”
The base is being upgraded with “the latest advanced US high-tech space telescope” and “space radar from an island on the Cape Canaveral launch range.” It sends its data, “on both space junk and Chinese and Russian military satellites alike, to the US Joint Space Operations Center.” In the event of war, North West Cape would provide targeting information for the shooting down of Chinese satellites. This would prevent Beijing from firing on US ships operating along China’s coast in the South China Sea.
Two bases in Geraldton, Western Australia, and Shoal Bay, near Darwin, monitor satellite data from across the Indian Ocean and the Pacific. Geraldton has been almost doubled in size following a series of agreements between the Obama administration and the previous Labor governments in 2008 and 2010. The deals allowed for the construction of antennas and other equipment for three new US military satellite communications systems.
The first system, known as Wideband Global SATCOM, provides for rapid transfers of huge amounts of data, which is critical for global US military communications, as well as the operations of surveillance and attack drones. The second system services a globally secure internal military Smartphone network. The article states that, without the third of the three new systems, known as DISA, “Pentagon plans for introducing armed and surveillance drones into south-east Asian and Indian Ocean operations will be difficult, if not impossible.”
The bases are just one component of the integration of the Australian Defence Forces (ADF) into a virtual arm of the US military. Pentagon strategic doctrines for war with China depend upon Australian forces blockading Chinese shipping lanes in south-east Asia. Agreements signed in 2011 allow for the stationing of 2,500 US marines in Darwin, and the opening up of Australian naval and air bases to US forces.
As the Financial Review article states: “Under a pervasive doctrine of interoperability, substantial numbers of ADF personnel—from major-generals down—are embedded in US high-technology units from Qatar to Hawaii to Colorado, building careers based on strategic doctrines which assume Australian and US national interests always coincide.”
Tanter’s article in the Financial Review is the latest to raise concerns about the degree of Australian integration into US war plans. While most of the Australian political establishment have lined up completely with the US “pivot,” some political figures and strategic analysts have urged caution. Former conservative prime minister Malcolm Fraser, for instance, has argued for ending the US alliance.
This layer is fearful that the Australian alignment with the US will damage economic relations with China, Australia’s largest trading partner, as well as precipitate a war with incalculable consequences. Moreover, they are deeply concerned that mass struggles could erupt, as workers and youth become aware of the implications of US war plans against China.
The entire ruling elite is determined to keep the working class in the dark over US military preparations and Australia’s involvement. That is why Tanter’s essay has only been published in the pages of Fairfax’s elite financial publication, and is not the subject of comment in the wider print and electronic media.
The Socialist Equality Party and the World Socialist Web Site have consistently sought to expose this conspiracy of silence and, in doing so, to build an international anti-war movement of the working class to abolish capitalism and its outmoded nation-state system that is the source of war.

Falling oil prices trigger new layoffs, budget cuts in Louisiana and Texas

E.P Bannon

Low oil prices have sparked an economic downturn in the state of Louisiana. Reports are already emerging of layoffs and drastic pay cuts throughout all sectors of industry. In one instance reported to the New York Times, a tugboat captain took a 90 percent pay cut just to keep his job. The same article describes the economic situation in Louisiana as a “slow strangle.”
Oil giant Halliburton hinted late last month that more layoffs are coming this year across North America. Executives said land rig counts have dropped by 250 since December, around 15 percent. Capital budgets for customers are down 25-30 percent and more rigs will be idled.
Halliburton employs around 1,000 workers in southern Louisiana. The company has confirmed recently that “minimal” layoffs have already begun across their operations in Lafayette, Louisiana. This comes after the company’s announcement of some 1,000 layoffs overseas late last year. Schlumberger, Halliburton’s chief rival in the industry, announced last month it would lay off 9,000 employees—roughly seven percent of its entire workforce.
More layoffs have begun in nearby Texas. GE Oil & Gas has announced that it will lay off 330 workers at its Lufkin Industries subsidiary. The plant, located in Lufkin, Texas, manufactures pumping units, enclosed gear drives, and castings for heavy equipment and machine tools for oil and gas operations.
US Steel Tubular Products is due to lay off 318 workers in Morris County, Texas. Last month, the company laid off 142 workers at its pipeline manufacturing facility near Houston. Lariat Services Inc., an onshore drilling provider, has announced that it will lay off 250 workers across the state. Trican Well Service has announced that it will lay off 125 workers in Gregg County and Sandridge Energy will cut 25 in Ector County.
Shell, ExxonMobil, BP and other energy giants have used the price fall to justify their hard line in negotiations for a new labor agreement for 30,000 oil industry workers. Last Sunday, the United Steelworkers called a limited strike involving 3,800 workers, including thousands of workers at five refineries in the Houston area. Talks between the USW and industry negotiators have resumed with the companies refusing to accept the union’s meager wage demands or back down on further cost cutting.
(See: “US oil industry strike enters fourth day as companies resist wage and safety demands” ).
Goodrich Petroleum Corp. announced last week that it would cut the amount of spending on oil exploration to $80 million to $100 million, down from its initial projection of $150 million to $200 million. The company extracts oil from Tuscaloosa Marine Shale, a geological formation located throughout South Louisiana. Only three rigs are now working in the region, according to the Times Picayune, down from nine in the summer of last year. It is speculated that production may soon fall down to two rigs.
Other drilling companies have begun to pull back as well. Comstock Resources has already suspended drilling throughout the area. Sanchez Oil and Gas Corp. claims that it will drill at three locations in the shale formation this year, but has not yet commenced at any of them. The much larger Encana Corporation also has investment in the shale formation. The company has announced plans to freeze drilling in a recent slide show meant for investors. The decision to pull back is described as having “massive upside potential” in the wake of the downturn.
The region of south Louisiana has already begun to react to the slowing economy. Major construction projects throughout the state are currently being frozen. Last Wednesday, plans to build a $14 billion gas-to-liquids plant in south Louisiana were put on indefinite hold. Similar announcements are expected in the coming months.
The year’s budget projections are increasingly grim and will likely be used for further cuts to what remains of the social infrastructure. Roughly 14 percent of the state’s general fund revenues come from oil and gas. Louisiana’s state revenue estimating committee announced that there will be a $104 million shortfall due to the falling prices. It also found that the budget hole for next year will be at least $204 million more than previously projected, bringing it to just over $1.6 billion overall.
Governor Bobby Jindal already cut state spending by $180 million last month, citing falling oil prices as a reason. Even before the prices plummeted, however, colleges throughout Louisiana were told to prepare for more than $300 million in cuts. It is already speculated that some smaller campuses will have to shut down entirely due to the reductions in funding. Health care services will be forced to take a $250 million hit, which could increase to double the amount if the state cannot access certain forms of federal funding. The full extent of dropping oil prices have not yet been felt and it is likely the state government will propose even further cuts.
The economic blowback, not readily apparent at the moment, will be felt in nearly all sectors of the economy. Service companies working for firms related to the oil and gas industry will also be hard hit as they lose business from their main clients. Several hundred people working as “landmen,” who negotiate leases and land rights for oil exploration, have already been laid off in Lafayette. Other service firms are beginning to accept dramatically lower contracts with oil companies, which are seeking to cut costs in any way possible. This will inevitably translate to wage cuts and layoffs in these peripheral industries, mainly based around small to mid-sized companies.
Many of these smaller firms faced with the real prospect of going under are being quickly bought up by large corporations. The downturn in the region is leading to an ever-increasing growth of monopolies throughout the industry. In turn, these large corporations are using the crisis as an opportunity to cut costs while often ignoring safety regulations.
In the comment section of Lake Charles local news outlet KPLC, residents and workers described the situation. One worker wrote that layoffs had already begun in Louisiana that had not been reported. “Layoffs started in October,” he wrote. “I was laid off November 3.” Another local resident wrote, “Any lower [oil prices], and my husband will get laid off. He is the main source of income in our home of three adults and a toddler.”
Some newspapers have begun to draw comparisons between the current downturn and the oil bust of the 1980s. Louisiana suffered a severe economic catastrophe in 1986, when oil prices plummeted from $27 per barrel to below $10. Entire shopping districts in major cities like New Orleans and Baton Rouge closed, while city centers and commercial hubs became largely vacant. One in eight workers in Louisiana was unemployed, the highest rate in the nation. In small oil-based towns in southern Louisiana, such as Morgan City, the unemployment rate was as high as one in four.