Puerto Rico faces default on its debts

Rafael Azul

Puerto Rico’s Development Bank (Banco Gubernamental de Fomento, BGF) is in last-minute negotiations with the holders of Puerto Rican bonds over the island government’s $72 billion public debt and an impending default on the next bond payment, due January 4.

The negotiations are occurring following a decision by the US Congress not to grant Puerto Rico protections under Chapter 9 of the US bankruptcy laws.

On December 14 Congress postponed action on a bill that would have provided emergency debt relief for Puerto Rico. That bill, sponsored by Republican Senator Orrin Hatch, included a $3 billion subsidy, reduction in federal Social Security taxes and a federal financial control board.

With bankruptcy protection off the table, the administration of Governor Alejandro García Padilla had lobbied Congress to include the Hatch proposal in an omnibus budget bill for the US federal government. It now appears that Puerto Rico has run out of options and will default on payments next week.

To avoid default, Puerto Rico needs to make a $957 million interest payment January 4, followed by $331 million in February. In July another payment of $956 million is due together with $1.024 billion to redeem maturing bonds at face value.

Despite having embraced a measure that would have subordinated his and future administrations to a Wall Street-run control board, García Padilla denounced congressional inaction: “This fiscal crisis will soon become a humanitarian crisis under the American flag and the Commonwealth will be dragged into massive, costly litigation, which will prevent the Commonwealth from providing essential services to its citizens,” declared the governor.

“By not acting now, Congress has opted for the US Commonwealth to default on its obligations and unfold into chaos. Once again Wall Street has demonstrated its control over Congress; Wall Street rules Congress.”

García Padilla also announced that he would not be running for reelection next November in order to better deal with the payment crisis, thus becoming the fourth one-term governor in a row. The last three carried out layoffs of government employees, school closures, sales tax hikes, attacks on pensions and health benefits and other austerity measures.

In 2009, following the layoff of more than 20,000 employees by governor Luis Fortuño, hundreds of thousands of workers took to the streets in mass protests in a one-day general strike. Another wave of protests of workers and students took place in 2010.

The negotiations between the creditor group and the Puerto Rican government now take place in the heels of an activation, by the García Padilla administration, of a “clawback” clause that would sequester financial resources from various government agencies (transportation, government-owned utilities and others) and transfer those resources to pay holders of Puerto Rican General Obligation bonds (GO bonds) that are constitutionally guaranteed.

Melba Acosta Febo, the BGF’s director, predicted that the “clawback” would force the infrastructure fund AFI to default on their January debt service of $34 million. She declined to predict whether the GO bonds would default on next month’s debt service payment. In previous statements, Acosta Febo has been categorical in declaring that default is a certainty if no action is taken.

The BGF director said that within the next few days it will make a proposal to a bondholders group that includes Millstein & Co., Cleary Gottlieb & Hamilton and CitiGroup. The proposal involves the creation of a new debt instrument, called a “superbono,” as part of an austerity package of restructuring government spending.

It is widely acknowledged that the various hedge funds that hold Puerto Rican bonds, including Oppenheimer Funds and others, and those that insure the bonds, through swaps and other financial derivatives, pressured US congressmen of both parties not to take any action that could potentially force them to accept less than the entire face value of the bonds—which now sell at a steep discount—plus interest payments that are now due.

Anticipating this turn of events, so-called vulture funds have bought Puerto Rican bonds for far less than their face value, with the expectation of making a killing.

Both García Padilla and Acosta Febo recognize that, by turning its back on bankruptcy protection and on debt relief, the US government has effectively made a beggar out of Puerto Rico, forcing it to accept the terms the hedge and vulture funds demand: payment in full on the backs of the Puerto Rican people.

Wall Street and Congress have emphasized the supposed fiscal irresponsibility of successive Puerto Rican governments that were borrowing in response to a decade of economic slump, but in truth, the debt crisis itself was made in Wall Street.

In 2006 Puerto Rico sank into its most severe recession since the 1930s, a direct consequence of the deindustrialization of the island. During the preceding decade the number of industrial jobs had fallen from 160,000 to 75,000, as textile and pharmaceutical firms fled to more profitable locations.

Faced with the unraveling of a post-war model of attracting investments through tax breaks and low wages for its largely non-union work force, Puerto Rico resorted to borrowing to make up for the capital flight then occurring.

Compounding the economic crisis were austerity policies that further shrank the economy, accelerating the decline in jobs, living standards and the tax base. Serial indebtedness chased ever-declining living standards. During the last nine years, Puerto Rico has cut pensions and government jobs, slashed health benefits for teachers, shuttered public schools, imposed new sales taxes (and then raised them from 7 to 11.5 percent), while steeply raising fees for water and power and taxes on fuel.

Despite these draconian measures, the so-called structural deficit in government spending kept going up, and each administration since 2006 sold tax-free GO bonds to bridge the gap.

Wall Street hedge funds happily obliged, attracted by the low-risk and usurious yields of the bonds—rated as junk bonds since last year—with the expectation that neither the Obama administration, Congress or the Courts would act against its profit interests.

Meanwhile the economy continues to crumble. Since 2004 Puerto Rican GDP has shrunk by 13 percent. More than 40 percent of youth are unemployed. Since 2006 the amount of capital leaving the island exceeds new investments. Per capita income is 7 percent less than in 2006 and social inequality is exploding. The official November unemployment rate of 12.5 percent is more than double the US rate.

Over 10 percent of the population has migrated to the US since 2006, including thousands of medical doctors, engineers, teachers and other highly qualified personnel. Presently less than 40 percent of working-age Puerto Ricans have a job or are looking; one-third of the population survives on US food stamp benefits.

Despite his protestations over congressional inaction, García Padilla has contributed to the increasing human misery facing Puerto Ricans with draconian austerity measures, raising regressive sales taxes, reducing health and vacation benefits for public employees and cutting food stamps and public transit.

As is the case in Greece, Spain and other indebted nations, each austerity measure further sinks GDP and living standards and the capacity of the government to extract resources with which to pay debt holders, requiring yet another round of austerity.

Among the measures that are being contemplated for 2016 are the gutting of Puerto Rico’s schools and health systems, the reduction of minimum wages and legislation making it easier to fire workers.

The New York Times, in an article that appeared on December 19, indicated that the Wall Street hedge funds and speculative “vulture” funds oppose any proposal that would allow Puerto Rico, or any of its cities or state agencies, to declare bankruptcy (like Detroit did in 2013).

The article chronicles the campaign of hedge and vulture funds to use their financial clout for Congress to deny bankruptcy protection to Puerto Rico, using massive campaign contributions, deceiving publicity campaigns and self-serving reports on the state of the island’s finances.

The funds also bitterly opposed and campaigned against a December 4 decision by the US Supreme Court to involve itself in part of the debt, the $22 billion owed by Puerto Rican utilities and other public agencies.

Furthermore, the vulture funds seek to create a precedent that would apply to US states such as Illinois, New York and California, which are heavily in debt, excluding them from bankruptcy courts. Puerto Rico’s outstanding debt of $72 billion in fact is only small part of the $3.2 trillion outstanding US municipal and state debt.

The fracturing of the European Union

Peter Schwarz

It is 70 years since large parts of Europe lay in ruins. Great power aspirations, nationalism and fascism made the continent the focus of two world wars, which together claimed nearly 100 million victims. Now, these same tendencies are spreading once again.

Everywhere in Europe, the ruling elites are moving sharply to the right. They are boosting military spending, taking part in the imperialist wars in the Middle East and Africa, sealing up borders and inciting xenophobic sentiments against refugees. They are developing authoritarian forms of rule and building up a police state in order to suppress growing social tensions.

After the attacks in Paris, the Socialist Party government imposed a state of emergency for three months, stationed thousands of soldiers on the streets and deployed the military’s only aircraft carrier to the Persian Gulf to bomb Syria. The beneficiary of this policy has been the right-wing National Front, which became the strongest party in the first round of the recent regional elections.

In Hungary and Poland, governments openly profess their admiration for the authoritarian regimes of the 1920s and 1930s.

In Germany, leading politicians and academics demand that the country again take on the role of a “hegemon” and “disciplinarian” in Europe and aspire to be a major power in the world, as if the crimes of the Nazi regime never happened. The austerity policies that Berlin has imposed on the economically weaker EU members for years have aggravated social and political tensions throughout Europe.

Even the Italian Prime Minister Matteo Renzi, who otherwise is a political follower of the German chancellor, criticized Angela Merkel in the Financial Times this week for pushing economic policies that are fanning the flames of populism and damaging incumbent governments across the continent—and are based on double standards favoring Germany and hurting Italy. Governments in Warsaw, Athens, Lisbon and Madrid had lost their jobs because they followed the policy of fiscal discipline without true growth, Renzi complained.

Numerous recent comments in the media focus on the potential break-up of the EU under the pressure of growing contradictions and tensions.

Reuters correspondent Paul Taylor writes under the headline “Europe’s year from hell may presage worse to come”: “The crises of 2015 have threatened to tear the Union apart and left it battered, bruised, despondent and littered with new barriers.”

EU Parliament President Martin Schulz warned in Die Welt that no one can say “if the EU will exist in this way in a decade”. The alternative, he writes, is “a Europe of nationalism, a Europe of borders and walls. That would be devastating, because such a Europe has led our continent in the past repeatedly into disaster.”

An editorial in the Süddeutsche Zeitung even demands a “Plan B” in the event that the EU breaks apart. The main danger comes less from Greece and the refugee crisis or an exit of Britain than from “neo-nationalism”, the newspaper states.

While these and other comments warn of a break-up of the EU and the possible consequences, they do not answer the question of why nationalism and militarism are flaring up again in Europe. Indeed, they do not even pose the question.

Contrary to the claims of official propaganda, the EU has never overcome the conflicts that made Europe the center of two world wars. The EU does not unite the peoples of Europe, but has always been a weapon of the most powerful economic and financial interests against the working class at home and international rivals abroad. It is a hotbed of nationalism, inequality, dictatorship and war.

The EU is living proof that it is impossible to unite the continent on a capitalist basis. The defence of capitalist private property and the free movement of capital and profits, which are the focus of the EU treaties, inevitably have the consequence that the most powerful corporations in the EU set the tone and the strongest states impose their will on the weaker. Instead of alleviating national and social contradictions, the EU exacerbates them to the extreme.

The enlargement of the EU into Eastern Europe a decade ago did not bring democracy and prosperity. The new members have served the major European corporations as a source of cheap labor. Their welfare programs are being destroyed, wages kept low and unemployment high, while a small corrupt elite enjoy prosperity.

The EU, and especially Germany, took advantage of the financial crisis of 2008 to dictate unprecedented social cuts in the name of fiscal consolidation. In Greece, which was made an example, the average standard of living declined by 40 percent in a few years.

The EU and its members have responded to the growing social tensions with militarism and increased repression. The real or supposed danger of terrorist attacks have served as a pretext for further anti-democratic measures.

With the refugee crisis, the consequences of imperialist wars in the Middle East and North Africa have returned to Europe. The refugee issue has further polarized Europe. While large sections of the population react with solidarity, the ruling circles have unleashed a furious campaign against refugees, building up border fences and fighting each other.

The dangers arising from the break-up of the EU are very real. New wars and dictatorships, even within Europe, loom. This danger cannot be prevented by defending the EU, but only in a relentless struggle against it and the capitalist system upon which it is predicated.

The only way to unite Europe in the interests of its peoples, to use its vast resources in the interest of all and to prevent further wars, is through the United Socialist States of Europe. Only the independent mobilization of the European working class on the basis of a socialist programme can halt the impending disaster.

German trade union chief agrees to €1 an hour jobs for refugees

Dietmar Henning

Rainer Hoffmann, the chairman of the German Confederation of Trade Unions (DGB), has backed the announcement by Labour Minister Andrea Nahles that refugees will be pressed to accept work at €1 per hour in the coming year.

Nahles, a member of the Social Democratic Party (SPD), presented figures from her ministry according to which between 300,000 and 350,000 refugees, among them 70,000 children, will receive Hartz IV benefits for the first time next year. Asylum seekers whose applications have been accepted as well as refugees who are allowed to remain, together with their children, have a right to claim Hartz IV aid.

Along with the Rhineland-Palatinate premier Manu Dreyer, federal government representative for immigration Aydan Özoguz, federal minister for families Manuela Schwesig, and Environment Minister Barbara Hendricks (all SPD members), Hoffmann announced, as part of a twelve-point programme for “sustainability and integration in Germany,” the creation of 100,000 new “labour opportunity” positions, i.e., €1 jobs.

In an interview with Die Welt, Hoffmann said, “I can imagine that for a certain period of time we would create a social labour market for socially necessary activities that otherwise would not be carried out.”

The €1 jobs are anything but a “social labour market.” They do not involve a labour relationship. No wages are paid. Instead, in addition to Hartz IV social welfare benefits, claimants receive compensation up to the equivalent of €1, or, occasionally, €2 per hour for a thirty-hour work week. The claimants have to use the additional compensation to cover costs such as transportation. If they become sick and are forced to stay at home, they receive no additional compensation.

The unemployed rarely accept these jobs voluntarily. They are compelled to do so with the threat of benefit cuts if they do not.

Forced community service is a better description of the €1 jobs than the euphemistic term “social labour market.” Academic studies have compared these jobs to “welfare-to-work” programmes and the underlying concept of workfare, referred to in Germany as “working for the bare essentials” and “the duty to work in exchange for state provision of the basic necessities of life.”

Hoffmann, who is also an SPD member, suggested that, as with the unemployed, the unions would demand “a minimum wage and social insurance for the employees.” However, since the €1 jobs do not amount to a “labour relation” in the legal sense, they are not covered by social insurance.

Hoffmann nonetheless supports this form of coerced community service. “We will have to see whether the refugees are suited to that,” he said, adding that “there should be projects in which we try out different things.”

Like the local authorities that employ €1 workers to carry out “socially necessary work,” refugees are to be made responsible for the integration of new refugees. The SPD politicians’ twelve-point programme states that local authorities offering labour opportunities will profit “from their support for refugees.”

The €1 positions do not result in real jobs. Fewer than one in ten people holding such positions move to regular employment. Most unemployed people become further removed from the labour market while working at a €1 job.

In a 2011 study of such jobs in Munich, the Institute for Labour Market and Career Research, a branch of the federal labour ministry, wrote, “Employment in a mini-job curtails the employment prospects of participants by an average of 40 percent.” The negative impact in regions with high unemployment, such as eastern Germany and the Ruhr, is even more severe.

Although the DGB officially calls for minimum wage jobs to provide social insurance, Hoffmann knows full well there is virtually no chance that people out of work for more than a year will receive such benefits. Moreover, for six months, the unemployed can be hired for less than the minimum wage of €8.50 per hour.

Since more refugees are arriving than companies require, restrictions on immigration are being strengthened and expanded, in the first place in the form of the “acceleration of asylum law.” Language courses and assistance in finding work are available only to refugees with “strong prospects of being permitted to stay.”

The distinction between refugees with “high” and “low” prospects of being allowed to stay is a euphemism for distinguishing between refugees who, in the words of Christian Social Union official Günther Beckstein, “are useful to us” and those “who exploit us.”

The federal and state governments, corporations and trade unions are working together to deport the majority of refugees, while exploiting the rest as a cheap labour force.

Canada’s central bank expresses trepidation over economic downturn

Roger Jordan

Canada’s economic output stalled in October, according to figures released last week. This followed a contraction of 0.5 percent of Gross Domestic Product in September, indicating that Canada’s economy is struggling to pull out of the recession it experienced in the first half of 2015.

In all, Canada’s economy has failed to grow in seven of the year’s first ten months.

Recent weeks have witnessed a precipitous fall in the value of the Canadian dollar, as the country’s economy is rocked by the collapse in commodity prices and by anemic growth in the US.

In the wake of the US Federal Reserve Board’s Dec. 16 decision to increase interest rates, the Canadian currency declined to US $0.72, its lowest level in eleven years. Analysts are predicting the currency will soon fall below the 70-cent mark. It has already lost 17 percent of its value this year, falling to an eleven-year low against the US dollar.

The deepening economic slump is being driven by the global crisis. The collapse in oil prices, which have been halved to $36 per barrel over the past twelve months and are down from over $100 over the past year and a half, together with a similar sharp slide in other commodity prices, have hit Canada’s resource- and export-dependent economy hard. The economic downturn in China, whose demand for raw materials helped maintain commodity prices, has played a major role in this.

The anticipated boost to exports as a result of the Canadian dollar’s sharp fall has not materialized, mainly because other currencies, such as the Mexican peso, have declined at a similar pace against the US dollar. Mexican exports to the US are rising steadily, while Canada’s have been stagnant for some time. Last month, Ottawa was overtaken as Washington’s largest trading partner by China.

A recent Bank of America/Merill Lynch report noted that capital outflows from Canada are taking place at the fastest rate among developed countries. In a sharp reversal from twelve months ago, when the Canadian economy saw an inflow of capital chiefly in the energy sector equivalent to 4.2 percent of GDP, it is now experiencing capital outflows equal to 7.9 percent.

Even worse could still be to come. There are mounting fears that a collapse of the overheated housing market, or a series of bankruptcies among oil producers in Alberta due to the decline in the currency and oil prices, could provoke a broader economic crisis.

Responding to the darkening clouds over the economic outlook, Bank of Canada (BoC) Governor Stephen Poloz gave a speech December 8 laying out measures the bank would be prepared to take in the event of a major crisis. Having reduced interest rates twice already this year from 1 to 0.5 percent with no discernible impact on the economic slide, Poloz declared the bank could follow the example of the European Central Bank (ECB) and introduce negative interest rates. He therefore announced a reduction in the Bank of Canada’s “floor interest rate,” below which it will not lower rates, slashing it to -0.5 percent. This goes significantly further than during the 2008-09 crisis. Then the bank declared it would be prepared to lower its prime lending rate to as little as 0.25 percent.

Poloz also said that in the event of a major crisis the bank could resort to “quantitative easing,” that is, the making available of billions in cheap credit to the financial elite to fund stock market speculation. While such programs have been pursued by the ECB and above all by the US Federal Reserve, such a step would be unprecedented for the BoC.

The central bank chief sought to reassure his audience, and the markets, that he was simply outlining future policy options for the bank. “Today’s remarks should in no way be taken as a sign that we are planning to embark on these policies,” he claimed. “We don’t need unconventional policies now and we don’t expect to use them.”

Poloz based this assertion largely on the claim that fiscal stimulus implemented by the government tends to be more effective than monetary policy. On this basis, he has welcomed the Liberal government’s intention to run budget deficits to fund an infrastructure investment program that will see up to an additional $25 billion invested over the next three years.

Yet in the less than three months since the Liberals won the federal election with infrastructure spending as one of their key campaign pledges, the government’s financial position has significantly worsened. This has led Prime Minister Trudeau to abandon the Liberals’ promise to limit the federal budget deficit to $10 billion per year in their first two years in office. Senior government officials are now saying only that they will ensure that the total national debt-to-GDP ratio continues to decline. This would allow annual deficits of up to $25 billion per year.

While the government is giving itself some leeway to run larger deficits in the short term, Trudeau insisted in a recent interview that the Liberals’ commitment to balance the budget prior to the next election in 2019 is “cast in stone.” This means that the government will have to go substantially beyond the $6 billion in annual “savings” it pledged to find in the final year of its mandate.

Compounding the threat facing workers from further austerity is a series of troubling developments that could trigger even greater economic turbulence.

Household debt reached record levels in the third quarter, rising to 163.7 percent of disposable income from 162.7 percent in the second quarter. This places Canada among the countries with the highest level of household debt in the world.

Poloz acknowledged December 15 that rising debt levels pose a significant risk to the property market. BoC figures show a dramatic expansion of households, especially among younger adults, in extreme indebtedness, with 8 percent of households now having debt worth more than 350 percent of gross income. The rate of “extremely indebted” has actually doubled since the 2008-09 economic crisis.

The Bank’s “financial systems review” described the risk of a price drop in the property market as “elevated” and admitted that the consequences of such a development would be “severe.” The other elevated risk it mentioned was the sharp economic contraction experienced by China and other “emerging markets.”

Earlier this month, the government announced measures to try to cool the overheated housing market in Toronto and Vancouver. But commentators fear that this could have the unintended consequence of accelerating the decline in housing prices in Alberta, Canada’s main oil-producing province, potentially leading to a spike in personal bankruptcies and mortgage defaults.

Alberta has undergone a sharp economic contraction this year, with final figures for 2015 expected to show a 1.1 percent decline. In 2014, 35.7 percent of Alberta’s GDP was derived from capital investment, three times the national average, and the energy sector accounted for 60.7 percent of this. The Economics Society of Northern Alberta gloomily predicted that the oil price drop, which has prompted billions to be cut from the oil companies’ capital spending budgets, will create a tax revenue deficit for Alberta of $11 billion per year for each of the next 3 years.

A total of 63,800 workers lost their jobs in the first eight months of the year in Alberta, almost as many as in the whole of 2009 at the height of the global downturn.

According to the latest predictions from Goldman Sachs, oil prices could drop as low as US$20 per barrel. Such levels could force many of the already struggling oil producers in Alberta’s tar sands, where production costs are among the highest in the world, into bankruptcy or make them prime candidates for takeover by foreign competitors keen to seize the opportunity afforded by the cheapened Canadian currency.

The federal Liberal government is so concerned about the state of Alberta’s economy that it is establishing a council of Canadian and high-profile international politicians, economists and businessmen to advise it on how growth can be sustained in Alberta’s economy.

A similar crisis is unfolding in Newfoundland, another oil-producing province. Faced with a provincial budget deficit that has ballooned to $1.9 billion, the newly elected Liberal provincial government has announced a series of emergency measures, including a hiring freeze, and is vowing to take further austerity measures, including potential wage and job cuts, early in the new year.

US military to expand global operations in 2016

Thomas Gaist

The year 2015 will be remembered as a year of expanding global warfare and militarism. It began with discussions of the possibility of “total war” against Russia over the Ukraine crisis, saw new provocations against China in the South China Sea, and draws to a close amid the escalation of the US and European war in Iraq and Syria and the spread of conflict to Yemen, Libya and other parts of Africa.

The imperialist powers are determined to make 2016 an even bloodier and more dangerous year. Germany and Japan are openly remilitarizing, as their governments seek to whitewash and rationalize the crimes of the World War II era. All of the imperialist powers have seized on the terror attacks in Paris and San Bernardino to place their populations and economies on a war footing.

The most dangerous factor is the US drive for global domination. The United States has its hands in virtually every country, employing drone assassinations, Special Forces operations and a network of military bases and agreements aimed at establishing unchallenged military domination over the planet, along with cyberspace and outer space.

More plans are afoot. Washington is preparing to expand its global basing system through the addition of a “larger network envisioned by the Pentagon,” which will include at least four new Special Forces hubs and numerous new “spoke” bases, according to a New York Times article published Monday.

The commando network will be centered on Eurasia and Africa but will be global in scope, according to Pentagon officials. Among the new bases will be a permanent establishment in Afghanistan, which will function as “a hub for Special Operations troops and intelligence operatives throughout Central and South Asia.”

The record of the US special units, which have emerged as the spearhead of the so-called “war on terror” since 2001, makes clear the murderous nature of the escalating commando war. US Special Forces have been granted a general license to carry out violence and mayhem in every part of the world with total disregard for international law. Thousands of US commandos are already operating in between 85 and 130 countries worldwide, according to varying estimates by US media sources.

The enlarged Special Forces network is only one element of a broader strategic escalation by Washington. US weapons manufacturers are collaborating with the government to channel an expanding war chest of arms to allied governments and proxy forces, with American weapons sales surging in recent years. In 2014, total US arms sales jumped by $10 billion to a total of $35 billion, giving US corporations control over 50 percent of the world weapons market, according to a congressional report released last week.

The intensified drive for a redivision affects every region of the world.

Europe

Washington is pre-positioning military equipment and deploying conventional forces and military “advisors” and trainers throughout Europe in preparation for war against Russia.

The US Army plans to double the number of tanks it has deployed to Europe, sending another full armored brigade to the continent, accompanied by infantry fighting vehicles and other heavy weapons as well as an additional full Army division dedicated to joint operations with NATO and European militaries.

In Ukraine, US Army forces are training five battalions of active-duty forces and US Special Forces are partnering with the Ukrainian military to develop Ukraine commando units.

Asia Pacific

South Korea, a country that has been tapped to serve as a staging area for US war preparations against China, was the leading importer of US arms in 2014, purchasing nearly $8 billion worth of American-made weaponry.

In December, the Obama administration approved the sale of $1.8 billion worth of weapons to Taiwan, including warships previously used by the US Navy and several advanced missile systems. The sale was the first weapons transfer to Taiwan in years and was clearly intended as a provocation against Beijing.

In the Pacific, the US Army’s “Pacific Pathways” program is coordinating joint operations with Asia-Pacific militaries. In the course of 2015, the program saw the US conduct joint drills with units from Australia, Indonesia, Japan, the Philippines, Malaysia, Mongolia, South Korea and Thailand.

Middle East

Leading purchasers of US weapons in 2014 included the ultra-reactionary regimes of Saudi Arabia, which purchased $4 billion worth of TOW missiles, and Qatar, which purchased $9.8 billion worth of US arms. Qatar has been a major backer of Islamist forces in Syria in the US-backed civil war against Assad.

The US has spearheaded a new imperialist carve-up of the entire region, with Britain, France and Germany piling into the wars in Iraq and Syria toward the end of 2015 and Saudi Arabia leading a US-backed war in Yemen.

Africa

Total arms sales to Africa—particularly in the oil-rich regions—increased by 50 percent between 2010 and 2014 over the previous five-year period. Cameroon and Nigeria, which are collaborating with the growing US intervention in West Africa in the name of the “fight against Boko Haram,” were among the leading importers of weapons. Preparations are underway to relaunch military operations in Libya, already devastated by the US-NATO war that overthrew and murdered Muammar Gaddafi in 2011.

Cyber and outer space

Even cyberspace and outer space are not exempt from the US-led militarization drive. In November, the US was one of only four countries to vote against a United Nations resolution, “No First Placement of Weapons in Outer Space,” which was supported by more than 120 member states. In a presentation earlier this year, US Undersecretary of Defense Robert Work outlined Pentagon plans to deploy a range of space weapons, which Work claimed are necessary to ensure military dominance over Russia.

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The experience of the Obama administration has underscored the impossibility of opposing imperialist war outside of a struggle against the capitalist system and all of its political representatives. Having won office in 2008 as an antiwar candidate, presenting himself as an opponent of the war in Iraq and an antidote to the militarism of the Bush administration, President Obama has presided over an escalation of the war in Afghanistan, wars for regime change in Libya and Syria, and a new war in Iraq.

Obama’s talk about ending the war in Afghanistan has been exposed by his decision to keep thousands of US troops in the country and the plans to establish permanent US bases there. All of his pledges of “no ground troops” or “boots on the ground” in Iraq and Syria have been exposed as lies.

The divisions that exist within the US ruling elite and the state over foreign and military policy concern the focus and methods of US efforts to dominate the territory and resources of the world, with the Obama White House arguing for a concentration on the struggle against China and his opponents demanding a larger commitment of troops and weapons to turn the Middle East into a de facto US colony. But there is no “peace faction” within the corporate and political establishment, or either of the two big-business parties.

One side of the global crisis is the slide toward a new world war. The other is the development of revolutionary struggles by the working class. Vast resources are allocated to destruction and war, while growing sections of the US population are pushed into poverty and forced to struggle for basic necessities such as housing, education, nutrition and health care.

The struggle against war can be conducted only on the basis of the independent mobilization of the working class in the US and internationally against imperialism on the basis of a socialist and internationalist revolutionary program.

UK floods bring further destruction to thousands

Barry Mason

Storms in December have brought floods to large parts of Wales, northern England and the border areas of Scotland.

Storm Desmond, at the beginning of the month, impacted heavily on Cumbria in northwest England with bridges washed away and many streets in urban areas underwater.

Over the Christmas weekend Storm Eva, while again hitting Cumbria and other areas, mainly affected areas of Lancashire, West and North Yorkshire. The latest floods hit highly populated areas including the cities of Leeds, Manchester, Salford and York. Thousands of people were forced to abandon their homes, including 4,000 in York alone.

The storms are estimated to have dropped an average month’s rainfall within a 24-hour period, often falling on already saturated ground, leading to rivers and streams rising rapidly, breaking their banks and flooding houses and businesses.

The cost of damage from Desmond is estimated at around £1 billion, while the cost of Eva’s destruction is likely to be at least £1.5 billion, and with further storms forecast the total cost is likely to rise considerably. Accountancy firm Price Waterhouse Cooper said the total cost of the damage nationally could exceed £15 billion.

The flooding over Christmas was accurately predicted, yet nothing was done by the government to assist those who were to be subjected to its ravages.

The weather forecast service, the Met Office, had issued two red weather warnings indicating a danger to life. The Environment Agency, which has responsibility for flood monitoring and prevention, issued 22 severe flood warnings, again indicating danger to life, in addition to 238 standard flood warnings for the Lancashire and West Yorkshire areas over the holiday period. A standard flood warning indicates people must be prepared to take immediate action to avoid the effects of floodwater.

York regularly suffers flooding, as the river Ouse that flows through the city receives water from the majority of the rain catchment area of North and West Yorkshire. This month water levels reached near record high levels, with the impact heightened by the flooding of the River Foss, which feeds into the Ouse at York. The floodgate that normally prevents the Foss from spilling over had to be left open, after the barrier’s pumping station was itself overwhelmed by floodwater, threatening electrical failure. This meant that water from the Ouse backed up the channel of the Foss.

Around 10,000 homes in the northwest had their electricity supply cut off. In Greater Manchester, the River Irwell, separating Manchester from Salford, burst its banks on December 26. This caused the worst flooding in the area since 1946, when 5,300 homes were deluged.

A number of houses were destroyed in working class districts, with Lower Broughton badly hit. A historic 200-year-old public house built on the Irwell’s banks was almost completely destroyed. In the Radcliffe area of Greater Manchester a gas pipe ruptured, leading to an explosion. On the main M62 motorway which runs across the north of England, a seven metre sinkhole opened up near the Rochdale junction.

Streets in Leeds city centre were inundated by water spilling over from the river Aire. Kirkstall Road, a major transport corridor to the west, running parallel to the river, became impassable.

Areas around the River Calder were severely hit. In East Lancashire, the town of Whalley was completely inundated. Further down the Calder valley, Hebden Bridge in West Yorkshire was deluged. Further down the valley, the town centre of Mytholmroyd was completely submerged and Todmorden was cut off.

The Conservative government made the usual perfunctory remarks expressing concern for those hit by the flooding, with statements from Prime Minister David Cameron and his Environment Secretary Liz Truss.

During a photo op visit by Cameron to York Monday to survey the damage and praise exhausted rescue teams, one woman shouted out, “No more cuts to public services.”

Following the floods in Cumbria, the government announced a new flood review to be led by Floods Minister Rory Stewart. It is tasked with developing plans to manage a worst-case flooding event and is to publish recommendations in 2016. None of this will resolve anything, with Stewart saying this week, “The underlying central problem I’m afraid is the weather. We have never had rain like this before.”

The truth is that the flooding disaster is the product of the vast cuts in the flood defence and infrastructure budget, compounded by a failure to maintain the UK’s decaying infrastructure over decades.

A Financial Times article dated December 15 highlighted the overall scale of government budget cuts to flood protection schemes:

“Whitehall budget cuts and a growing risk of serious flooding are set to stretch the environment’s department’s budget thinly, a committee of MPs has warned. George Osborne, chancellor, cut day-to-day funding for the department by 15 percent over the next four years in last month’s Spending Review, to £2bn a year… on top of a budget reduction of about a quarter over the course of the last parliament.”

The government is only committed to a paltry £2.3 billion in flood defence spending, as announced in 2014 by the previous Tory-Liberal Democrat coalition. The programme is to cover the period up to 2021. It is heavily reliant on private sector investment. £600 million is slated to come from outside organisations, but currently there is a £350 million shortfall, with the private sector only having contributed £61 million.

The Guardian on December 29 cited Professor Colin Mellors, head of the Yorkshire regional flood and coastal committee, warning that further government cuts would affect flood preparedness, saying, “With ever tighter budgets, it is clear that there will need to be even firmer prioritisation, especially in relation to maintenance activity.” In the new year, the committee would have to “consider sites where maintenance might be formally discontinued.”

It emerged this week that a proposed £180 million flood defence scheme for Leeds was cancelled last December.

It is estimated that one in six homes nationally are at risk of flooding. Yet the warning last year by the independent advisory body, the Committee on Climate Change, that three-quarters of flood defences were inadequately maintained, was ignored by the government.

With no adequate contingency plans in place, despite knowing the impact of the forecast heavy rain, the governments’ entire response is to rely on the use of volunteers, such as mountain rescue teams, and to send in a few hundred soldiers with sandbags to already submerged areas. The temporary barriers erected by troops were easily overwhelmed. But such are the levels of cuts that there is even a shortage of such temporary barriers, with around 85 percent of the total currently being deployed in Cumbria.

Thousands of people whose homes are inundated by floodwater now face huge costs to rectify the damage. Those without insurance coverage are threatened with financial ruin. Under current legislation, insurance companies are obliged to continue to offer insurance coverage to current policyholders. However, there is no limit on the premiums they can impose and householders and small businesses are often priced out.

Seven confirmed dead in industrial landslide in Shenzhen, China

Will Morrow

At least seven people have died and more than 70 are still missing presumed dead in the industrial landslide which engulfed a manufacturing area of the southern Chinese city of Shenzhen on December 20. As a 90-metre-high pile of industrial waste gave way, 33 buildings were destroyed in a wave of rock, construction debris and mud that buried over 300,000 square metres of land.

The death toll is likely to rise in coming days as the chance of finding survivors becomes ever slimmer. Lui Guonan, a geological expert at the China Academy of Railway Sciences, described the difficulty confronting the 5,000 rescuers operating 700 excavators and bulldozers. “This rescue effort will be much harder than for earthquakes or other disasters. When buildings collapse, there’s always some space created by the frames. But after a landslide, the mud will fill up that space like toothpaste.”

While the full human toll of the disaster emerges, it has become increasingly clear that the landslide was the inevitable and foreseeable result of the criminal indifference of government administrators and the landfill’s private operators.

It had already been reported that the Hong’ao Construction Waste Dump, where the landslide originated, was operating illegally without a permit for 10 months. The dump opened in February 2014, with a 12-month period of approval. According to the South China Morning Post, records show that the local government supervisor, the Urban Management Bureau in Shenzhen’s Guangming New District, had issued an order for the site to close in July due to safety concerns. The landfill continued to operate and no actions were taken to shut it down.

In a December 23 article, the Wall Street Journal revealed that reports on the Hong’ao landfill by a government-appointed monitor from September to December had documented numerous safety violations and warned that the pile was unstable. The monitor called for the site to suspend operations just four days before it collapsed. All of these warnings, available to both the company and government officials, were simply ignored.

In a document dated September 21-October 21, the environmental monitoring firm, Shenzhen J-Star Project Management, reported “severe” erosion on some slopes of the landpile. It also noted that workers did not wear reflective vests and that safety hazards were not clearly marked.

On October 20, J-Star issued a notice to Shenzhen Yixianglong Investment Development Co., the company which had been subcontracted out by the landfill’s operator, Shenzhen Luwei Property Management Co., to manage the landfill’s day-to-day operations. The notice “requested remedies for problems at the landfill, including insufficient monitoring of work quality and a poor safety culture,” according to the Wall Street Journal.

In a second report dated October 21-November 21, J-Star detailed “slight natural sinking” in part of the landfill, “subpar” safety measures, damaged drains and a shortage of machinery. The report requested that the landfill soil be compressed in order to stabilise it .

Finally, on December 16, J-Star issued a “work suspension order” to Yixianglong, effective immediately, which was ignored.

The central Chinese Communist Party (CCP) government in Beijing has swung into overdrive with the by-now familiar actions that characterise its response to all industrial disasters. The criminal negligence of the private operators and local government administrators is denounced, and a handful of scapegoats arrested, in order to present the disaster as an isolated event and deflect any scrutiny of its broader social implications.

The state-owned Xinhua news agency announced on Monday that Shenzhen police had arrested 12 individuals, including executives of Yixianglong. On Sunday, news outlets reported that Xu Yuan’an, the director of the local Urban Management Bureau which is responsible for overseeing the landpile, had committed suicide by jumping off a building in a residential area of Shenzhen’s Nanshan district.

His death came just two days after central government investigators declared that the disaster was man-made, and warned that “culpability will be sternly pursued according to the law,” according to Xinhua. The same day, Shenzhen’s local CCP secretary declared in a televised news conference that the party leadership “will assume whatever responsibility should be assumed, accept whatever punishment is due, and punish whoever should be punished.”

At the same time, reports indicate that the government is preventing the victims’ loved ones from speaking publicly. The South China Morning Post reported that 76 teams of five government officials had been allocated to “take care of the relatives” of those missing, and that reporters had not been able to contact them since.

All of these measures are aimed at covering over the social reality: that the Shenzhen disaster is the inevitable consequence of the unbridled capitalist exploitation overseen by the CCP regime over the last thirty years, as it has presided over capitalist restoration and ruthlessly repressed any resistance by the working class to the country’s transformation into a sweat-shop for global capital.

There is particular nervousness in ruling circles that the disaster took place in Shenzhen, which has been a model for pro-market reforms that Beijing claimed would lift the living standards of working people. The Beijing News, a widely-read tabloid, commented with evident trepidation, “What is troubling about this accident is that it occurred in a first-tier city, Shenzhen. It is at the forefront of Chinese citizens in its level of modernization.”

A small fishing village in the 1970s located just north of Hong Kong, Shenzhen was transformed into one of China’s first Special Economic Zones. It was one of four cities visited by Deng Xiaoping in 1992 as part of the “Southern Tour” aimed at accelerating the opening up of China to foreign capital and capitalist exploitation. The city is home to some of China’s and the world’s largest technological manufacturing companies, including Foxconn, which operates a mega industrial complex in the city.

Shenzhen now has a population of over 10 million people. While it has the fourth-highest GDP in the country, and is one of China’s wealthiest cities per capita, the levels of inequality are staggering. A tiny layer of a Chinese capitalist class and upper-middle class are concentrated in the city’s wealthy central skyline district, surrounded by a vast mass of impoverished labourers.

Some 60 to 80 percent of the local population are “internal migrants” who have travelled from other regions hoping for work. These workers are not entitled to even the limited social services for healthcare and children’s public education provided to the locally registered population. Shenzhen is the only Chinese city in which the local language, Cantonese, is not the most widely spoken one. The average age in the city is less than 30. The local monthly minimum wage is 2,030 yuan ($US310).

The disaster occurs amid growing signs of restiveness of the Chinese working class as the Chinese economy continues to slow. In the latest reported incident, hundreds of workers from the Shenzhen Zhongtian Xin Electronics mobile phone assembly plant rallied outside local government offices yesterday after the company closed its doors, leaving 2,000 workers unemployed, according to Hong Kong Free Press. The workers are demanding their unpaid wages, after the company began delaying salary payments in 2014. The newsagency reported that at least 76 companies had closed in the area this year.

Japan and South Korea reach agreement over comfort women

Ben McGrath

The foreign ministers of Japan and South Korea met Monday in Seoul to formalise a deal over the long-running dispute regarding “comfort women.” The decision will undoubtedly be welcomed in Washington which has been pressuring its two allies to mend their rift so as to collaborate more closely in the US “pivot to Asia” against China.

Japanese foreign minister Fumio Kishida offered a limited apology over the treatment of South Korean “comfort women” who were forced to act as sex slaves for the Japanese army during the 1930s and 1940s. He promised a one-time payment of 1 billion yen ($8.3 million) to a fund to be established by Seoul for the 46 surviving victims.

“The issue of comfort women, with an involvement of the Japanese military authorities at that time, was a grave affront to the honor and dignity of large numbers of women, and the government of Japan is painfully aware of responsibilities from this perspective,” Kishida said following his meeting with his South Korean counterpart Yun Byeong-se.

“Prime Minister of Japan, Prime Minister [Shinzo] Abe expresses anew his most sincere apologies and remorse to all the women who underwent immeasurable and painful experiences and suffered incurable physical and psychological wounds as comfort women,” Kishida added.

In response, Yun declared that the issue was “finally and irreversibly” resolved, provided “the government of Japan will steadily implement the measures specified.” He also agreed to discuss moving a “comfort woman” statue of a young girl erected in front of the Japanese embassy in Seoul in 2011 by the Korean Council for the Women Drafted for Military Sexual Slavery by Japan.

“Comfort women” is the Japanese euphemism for women who were forced to work in brothels for the Japanese military during World War II. While estimates vary, approximately 200,000 women from throughout Asia, including Korea, China, and the Philippines, were recruited, coerced, and at times physically forced into becoming comfort women.

The joint statement stopped short of saying that the Japanese military had established the comfort women system or that women were forced into serving at the brothels. This is an obvious concession to the Abe government which has been seeking to whitewash the past crimes of the Japanese military, by claiming that the army did not organize the sex slavery and that the women were not coerced.

However, historians like Yoshiaki Yoshimi have demonstrated using documents from before and after the war that the military established and ran the “comfort women” system. The women were often deceived with the help of middlemen using promises of phony jobs or outright forced into sexual slavery.

South Korean President Park Geun-hye also met with Kishida and reportedly called Abe on Monday. The two leaders held their first bilateral summit in November where they agreed to resolve the comfort women issue, which Park described as “the biggest obstacle to efforts to improve bilateral relations.”

Surviving women in South Korea were critical of the agreement. “It seems neither government cares about the victims,” said Lee Yong-su. Another woman, Gang Il-chul stated: “This is not different from the Asian Women's Fund. Only the Japanese government's legal compensation and official apology will be the answer for us.”

The South Korean government will likely have a difficult time selling the agreement. Both major establishment parties regularly whip up anti-Japanese chauvinism to distract the working class from domestic social conditions. In fact, Seoul’s inability to push through a military intelligence sharing agreement—encouraged by the United States—with Japan in June 2012 led to the recent downturn in relations with Tokyo.

The government of President Lee Myung-bak faced public uproar over the agreement. Hoping to save face, Lee provocatively made a trip in August 2012 to the disputed Dokdo/Takeshima islets in the Sea of Japan, becoming the first South Korean president to do so. Nationalistic recriminations followed, including over comfort women, which did not end when Park came to power in February 2013.

Prime Minister Abe worsened relations with a visit to the controversial Yasukuni war shrine in December 2013, angering Washington in the process. The Obama administration has been pressing South Korea and Japan to collaborate more closely so as to facilitate the US military build-up in North East Asia directed against China. The US has military bases in both countries.

President Obama pressured Park and Abe to take part in a trilateral summit in March 2014. Following the meeting, Obama took Abe aside for a private discussion on the Trans-Pacific Partnership (TPP) and other issues. Obama also began applying pressure specifically over the comfort women issue, describing it as an “egregious human rights violation” during a visit to Seoul in April 2014.

Abe started to temper his stance. Despite having promised to do so, Abe stopped short last year of completely revising the 1993 Kono Statement, a limited formal apology for the abuse of comfort women. However, his government did issue a report that called into question the legitimacy of existing evidence used to write the statement. The Kono Statement, named after Chief Cabinet Secretary Yohei Kono, followed the first public revelations in the early 1990s of the abuses suffered by comfort women.

For all of Seoul’s talk about restoring the honor and dignity of the women, it is highly unlikely that the South Korean establishment was unaware of what happened during the war. Many politicians and military figures in the post-liberation period had served as Japanese collaborators in the colonial government or in the army, including President Park’s father, the post-war dictator Park Chung-hee, who was a lieutenant in Japan’s Kwantung Army.

A New Year’s sense of foreboding over the global economy

Nick Beams

Since the eruption of the global financial crisis seven years ago, it has been commonplace for bourgeois commentators to end each year with predictions of better economic times ahead. Not so this time.

Financial Times columnist Gideon Rachman summed up the prevailing mood in a comment this week. “In 2015,” he wrote, “a sense of unease and foreboding seemed to settle on all the world’s major power centres. From Beijing to Washington, Berlin to Brasilia, Moscow to Tokyo—governments, media and citizens were jumpy and embattled.”

On the economic front there are two sources of this mounting disquiet: First, the fact that despite the pouring of trillions of dollars into the global financial system by the world’s major central banks, recessionary tendencies are gathering momentum. Second, that, in Rachman’s words, “there is… a widespread fear that, after years of unorthodox monetary policy, another financial or economic crisis might be building.”

The predominant economic development in 2015 has been the deepening trend towards global recession. At its meeting in October, the International Monetary Fund forecast the lowest rate of global economic growth since the immediate aftermath of the financial crisis and warned that it could further downwardly revise its estimates.

The myth, assiduously promoted for a number of years, that China and the emerging market economies would provide a new foundation for global capitalism was finally buried this year, as China experienced its lowest growth levels since the early 1990s. Rather than provide a new base for expansion, the mounting problems in the Chinese economy, exemplified by the Chinese stock market crash over the summer and the devaluation of the renminbi, are negatively impacting the rest of the world, with major economic and political consequences.

The “left” turn in Latin American politics has come to an end as the boom fuelled by exports to Chinese markets has given way to recession. Brazil, once seen as a source of economic expansion, along with the other members of the BRICS group of countries, has been plunged into recession. Its economy contracted 4.5 percent in the last quarter in the biggest downturn since the 1930s Depression. This contraction has intensified its financial problems. November’s figures for the increase in Brazil’s public debt were the third highest on record.

The effects of slower growth in China are extending to the advanced capitalist economies. Canada, which is highly dependent on exports to China, has, with the announcement that the economy contracted in October, experienced negative or stagnant growth in seven of the first ten months of the year.

Falling iron ore export revenue, the result of the Chinese slowdown, is causing major fiscal problems for the Australian federal government as well as the states. In its latest budget update, the Turnbull government announced that it expected to lose another $7 billion in revenue over the next four years as compared to estimates made just last May, largely as a result of falling ore prices. These are now below $40 per tonne, compared to $180 per tonne four years ago. The once boom state of Western Australia has announced its biggest income fall since the Great Depression due to lost revenue from the mining industry.

For some time the US was touted as a bright spot in the world economy. To the extent that this is still the case, it only underscores the dismal situation everywhere else. US wages remain stagnant, economic growth remains well below levels achieved in all previous post-war recoveries, and industrial output is falling, with warnings that the sector has entered a recession.

The euro zone has yet to recover the levels of output reached before the beginning of the financial crisis, with no signs of any revival of investment.

One of the most prominent indicators of the onset of global recession is the precipitous fall in the prices of all industrial commodities. The Bloomberg Commodity index of 22 raw materials has fallen to its lowest level since the financial crisis.

While the plunge in the price of oil—down from its levels of around $100 per barrel in the middle of last year to just $36—has attracted the most attention, it is only the most prominent expression of a general tendency. Iron prices continue to fall, accompanied by precipitous declines in other metals associated with basic industry.

At the beginning of this year, the price of nickel, which is used in the manufacture of stainless steel, was expected to rise by 22 percent. It has fallen by more than 40 percent, a bigger decline than the collapse suffered by oil. Likewise, the price of zinc, which was predicted to rise by 16 percent, has dropped by 28 percent.

When the oil price began to fall, the view was advanced that this could be beneficial to the world economy by reducing energy costs. But any positive effects have been completely outweighed by the deepening slump. In an indication of future trends, the Organisation of Petroleum Exporting Countries lowered its long-term estimates for global oil demand and said oil prices would not return to the level of $100 per barrel until 2040 at the earliest.

The falling oil price has sent a shock wave through financial markets, hitting high-yield or so-called “junk” bonds as well as mutual funds that have invested in energy-related projects. With money available at ultra-low interest rates and oil fetching more than $100 per barrel, there was money aplenty for speculation. But with oil at below $40, many of these projects are unviable.

Mutual funds that invested in pipelines and other infrastructure projects have also been adversely affected. According to one analyst cited by the Financial Times: “These funds have never gone through the kind of energy price crash that we have had this year.”

The problems could extend more broadly to US banks. Wells Fargo, one of America’s largest banks, has already warned that low oil prices mean exploration companies and oil producers may not be able to repay their loans. It has been estimated by US regulators that there are five times as many oil and gas loans in danger of default than there were a year ago.

When the financial crisis broke in 2008-2009, the air was filled with talk of coordination and cooperation among the major capitalist powers. That has already gone by the board and the past year has seen growing divergences.

There is a rift in the policies of the world’s central banks, with the US Fed starting to lift rates while the European Central Bank and the Bank of Japan hold rates near zero and continue to pump money into the financial system.

While a façade of unity is maintained, divisions are deepening, especially as regards China. In March, there was a conflict between the US and Britain when the Cameron government, acting on behalf of British financial interests, defied US opposition and announced it was signing on to the Chinese-backed Asia Infrastructure Investment Bank, opening the way for other European powers to join.

A new conflict has now opened up, with the US reported to be lobbying to prevent the European powers, with Britain and Germany playing a key role, granting China market economy status under the World Trade Organisation (WTO). If China were so designated, it would further open up the world market to its exports. US officials have denounced the move as an attempt by European powers to win the support of Beijing as they seek profitable outlets for euro investments.

Widening rifts were also in evidence with the effective burial of the Doha Round of trade negotiations at the WTO talks in Nairobi earlier this month. This was chiefly at the instigation of the US, which is abandoning the pursuit of multilateral trade deals in favour of exclusive agreements, such as the Trans Pacific Partnership covering Asia and the Transatlantic Trade and Investment Partnership covering Europe, in which trade concessions are not extended to all but only to those countries agreeing to Washington’s demands.

The implications for the international working class of the deepening crisis are further austerity coupled with intensifying attacks on jobs, wages and working conditions.

Euro zone economists polled by the Financial Times this week set out the agenda with a call for a renewed push on so-called “structural reforms” of the labour market—the scrapping of remaining regulations governing wages and working conditions—aimed at nothing less than the creation of an impoverished cheap labour force.

Economic developments in 2015 have again underscored the fact that the crisis of 2008 signified a breakdown of the global capitalist system, not a downturn from which there would be a “recovery.” The coming year will bring a stepping up of the assault carried out over the past seven years. It can be met only through a political movement of the working class based on an international socialist program.