European Union finance ministers insist on more austerity

Julie Hyland

European finance ministers met Monday, just hours after Italy’s Prime Minister Matteo Renzi tendered his resignation, having seen his proposed constitutional reforms decisively rejected in Sunday’s referendum.

In addition to the authoritarian nature of Renzi’s reforms, his defeat was also shaped by popular hostility to the austerity measures he has sought to impose in Italy in league with the European Union (EU). Nonetheless, the finance ministers gathered in Brussels made clear there would be no retreat from this agenda.

The main item on the table was to complete a second review of Greece’s bailout programme, to enable the EU, European Central Bank and the International Monetary Fund (IMF)—the Troika—to sign off on the next tranche of funding, which is expected to eventually total €86 billion. No agreement could be reached, however.

Greece had sought reductions in the 3.5 percent primary surplus target that it is expected to run after 2018, and some debt relief. The IMF agrees that the primary surplus target is unrealistic and has urged loosening the terms on Greece’s debt payments in return for Athens imposing an extra €4.2 billion in austerity savings and further labour reforms, including abolishing collective bargaining and making it easier to sack workers.

While supporting the labour reforms, Germany and the Netherlands in particular are opposed to any debt relief measures. There are elections next year in both countries, as well as France, all contested strongly by anti-EU parties like the Alternative for Germany, Geert Wilders’ Party for Freedom and the National Front of Marine Le Pen.

Prior to the meeting, German Finance Minister Wolfgang Schaüble threatened Athens that if it wished to remain in the euro, it would have to deliver. Debt forgiveness would “not help Greece,” he said. “Athens must finally carry out the necessary reforms. If Greece wants to stay in the euro, there is no way past that—completely independently of the debt level.”

Germany and the Netherlands also insist that no EU funds will be forthcoming for Greece, unless the IMF is on board.

In the end, a discussion on the future of the bailout programme was postponed and the meeting agreed only minor and limited changes on debt repayment. This includes extending the timeframe by which Greece has to repay existing loans from 28 to 32.5 years, which will raise the interest rate. This “relief” will mean that, by 2060, Greece will have only achieved a 20 percent reduction in its debt-to-GDP ratio.

Greece has already been reduced to penury after seven years of austerity. The official poverty rate is 35.7 percent, but in fact it is far higher, while youth unemployment is at 50 percent. According to reports, many Greek businesses have gone bust or moved to countries with low tax levels, such as Bulgaria, where corporation tax is just 10 percent. The number of Greek-owned businesses that are registered in Bulgaria has risen from 2,000 in 2010 to 17,000 today.

The central role in imposing EU austerity diktats has been played by Prime Minister Alexis Tsipras and his pseudo-left Syriza coalition. Syriza won election in January 2015 promising to overturn austerity. In June 2015, the government received a massive 61 percent mandate to oppose the EU and reject the bailout conditions in a referendum. Within weeks, Tsipras had betrayed that mandate and was imposing even more draconian austerity measures than his conservative predecessor. Syriza is now deeply unpopular, languishing in the low 20s in opinion polls.

Tsipras had warned that any failure in agreement could lead to new elections, while Greek Finance Minister Euclid Tsakalotos cautioned after Monday’s meeting, “There should be no demands on Greece that do not take into account ... the current political and social situation.”

EU foreign ministers reacted with contempt and hostility to such concerns. Speaking after the meeting, Schaüble said, “I think for Greece it is realistic that they should carry out reforms to make themselves competitive ... For Greece it is a long, hard road.” Eurogroup president Jeroen Dijsselbloem said that “more work has to be done” and the troika would “stand ready to return to Athens to work on it.”

The finance ministers also rejected setting targets for fiscal stimulus in the eurozone. In November, the European Commission—concerned at rising anti-EU sentiment—proposed a fiscal expansion of up to 0.5 percent of GDP next year. While the meeting agreed vaguely that countries with the highest budget surpluses—Germany, the Netherlands and Luxembourg—should spend more, the ministers ruled out setting a figure.

Concerns over the implications for Europe of the developing crisis in Italy were simply brushed aside. The mantra was that Renzi’s defeat is a domestic problem and that the government would somehow proceed with the EU’s austerity agenda anyway.

Schaüble said, “There is no reason to talk of a euro crisis and there is certainly no reason to conjure one up,” while France’s Finance Minister Michel Sapin said the referendum “is a question of internal politics. The referendum wasn’t about Europe.”

Jean Asselborn, Luxembourg’s foreign minister, said that the result was a “domestic political argument ... Italy voted on a reform. It would be wrong to extrapolate that now to the European level.”

Dijsselbloem said Renzi’s defeat “doesn’t really change the situation economically in Italy or in the Italian banks. It doesn't seem to require any emergency steps.”

Such statements are absurd. In the last months, the EU has suffered the UK’s vote to leave the EU and now, in the US, faces President-elect Donald Trump, whose threats to undermine the NATO alliance between America and Western Europe have shaken European politics to its core.

Italy is the third domino to fall. Its economy has shrunk by 12 percent since 2008, and industrial production is down by more than 25 percent. Youth unemployment is at 40 percent, and poverty levels are on a par with Greece. The third-largest economy in Europe, Italy’s debt-to-GDP ratio is second only to Greece, at 133 percent. Its banking system is insolvent, loaded down with €360 billion in bad loans.

Italy’s Finance Minister, Pier Carlo Padoan, could not participate in Monday’s meeting because he was involved in emergency talks on a €5 billion rescue plan for the world’s oldest bank, Monte dei Paschi di Siena, to avoid bankruptcy at the end of the month. Uncertainty over Renzi’s successor means that it is not clear that investors—which include the Qatar Investment Authority—will go ahead with the recapitalisation.

More broadly, there is concern that Italy could be tipped into an early general election that would be to the advantage of the Five Star Movement, which has said it will push for a referendum on EU membership.

In contrast to the EU leaders, many corporate and political commentators are warning on the dangers of Italian contagion, with the Centre for Economics and Business Research (CEBR) predicting there was now a less than 30 percent chance of Italy remaining in the eurozone.

In Britain’s Financial Times, Gideon Rachman warned, “Renzi’s defeat could endanger the euro and risk a financial crisis.” Prior to the result, on November 27, he had already expressed his concern over the political impact of the response of the EU states and their ruling elites to growing oppositional sentiment across the continent, comparing it to the ancien regime before the French Revolution.

“The Bourbons were hard to beat as the quintessential out-of-touch establishment,” he wrote. “They have competition now…A Bourbon regent, in an uncharacteristic moment of reflection, would have backed off. Our liberal capitalist order, with its competing institutions, is constitutionally incapable of doing that. Doubling down is what it is programmed to do.” Rachman titled his comment, “The elite’s Marie Antoinette moment.”

François Hollande declines to run for re-election as French president

Kumaran Ira

On December 1, President François Hollande of the Socialist Party (PS) announced that he would not run for re-election in next year’s French presidential election. This is the first time since the creation of the office of the French presidency, at the beginning of the Fifth Republic in 1958, that a president has not sought to win a second term.

In a surprise 10-minute televised speech from the Elysée presidential palace, Hollande said, “I have decided not to run in the presidential elections for my own succession.” His decision came as the field was opened for PS presidential candidates to run in the party’s primary.

Hollande’s decision not to seek a second term had been widely predicted given his status as France’s most unpopular president ever. He regularly receives a single-digit approval rating in polls, which have also found that if the election were held today, he would come in fifth in the first round of voting and be eliminated from the runoff.

Hollande also tried to justify his presidency, citing his unpopular budget cuts: “I acted with the governments of [prime ministers] Jean-Marc Ayrault and Manuel Valls to rebuild France and make it fairer. Today, as I speak, the budget has been repaired, Social Security is balanced and the country’s debt has been preserved.”

After Hollande’s announcement, Valls declared his candidacy for the PS primary and resigned as prime minister; he was replaced by former Interior Minister Bernard Cazeneuve yesterday. Valls said, “I am running because France must use all of its weight in a world that no longer is what it once was: terrorist threats, rise of the far right … I want a France that is independent and unbending on its values.”

For now, polls show Valls is the front-runner among PS presidential candidates, leading former Economy Minister Arnaud Montebourg.

Valls belongs to the more explicitly right-wing sections of the PS and has repeatedly stated that the PS should remove the word “socialist” from its name, because “it doesn’t mean anything anymore.” He became prime minister in 2014 after being interior minister, and supported intensified austerity as well as the state of emergency imposed last year. Valls took the unprecedented action of threatening social protests against the PS labour law with a police ban, and repeatedly used article 49.3 of the French constitution to impose the law without a vote in the National Assembly.

Hollande’s decision to not seek a second term comes as the PS faces its deepest crisis since its foundation in 1971. The PS expects a major setback in the 2017 presidential elections, in which the neo-fascist National Front (FN) would win the first round, eliminating the PS candidate. It is unclear whether the PS would even be the main opposition party if either the FN or the right-wing Les Républicains (LR) wins the elections.

Hollande was therefore prevailed upon to allow Valls to run in the PS primaries, due to take place on January 22-29.

The 2017 French presidential election marks a lurch to the right by the ruling elite, amid growing instability across Europe following the Brexit referendum in June and the election of Donald Trump as the US president in November. Far-right nationalist forces are gaining strength across Europe, exploiting growing social anger against EU austerity measures and diverting it along chauvinist lines. In France, the FN benefiting is from the discrediting of the PS, posing as an alternative to traditional parties of the French establishment, the PS and LR.

The collapse of the PS is the result of deep disillusionment among the masses with its anti-worker record. Whenever it held office—under François Mitterrand as president (1981-1995), during the Plural Left government led by Prime Minister Lionel Jospin (1997-2002), and under Hollande since 2012—it ditched its electoral promises and attacked the working class.

Hollande came to power in 2012 by criticizing the policy of his predecessor, the unpopular right-wing incumbent Nicolas Sarkozy, declaring that “austerity is not France’s fate.” After his election, however, he embarked on EU-led austerity measures and imperialist interventions in the Middle East and Africa, above all in the former French colonies of Syria and Mali.

Over the last four years, Hollande implemented sweeping austerity measures and pro-business reforms that slashed workers’ living standards and sent unemployment soaring. Under the so-called “Responsibility Pact”, the PS imposed more than €50 billion in social cuts and €40 billion in cuts to corporate taxes. Along with his pro-business spending cuts, Hollande oversaw plant shutdowns including PSA-Aulnay and Goodyear-Amiens, slashing thousands of jobs.

While attacking workers’ social rights, the Hollande government deepened its attack on basic democratic rights, with measures to expel Roma and dismantle their encampments in France, in order to appeal to the FN electorate. The most notorious was the deportation of a 15-year-old Roma schoolgirl, Leonarda Dibrani, who was ordered off a school bus and deported to Kosovo. Thousands of students marched across France, denouncing Hollande’s repression of immigrants.

As his presidency went on, it became ever clearer that Hollande was seeking to sustain his policies of militarism and repudiating all the social gains won by the working class in the 20th century by appealing to far-right and nationalist sentiment and moving towards police-state rule.

Seizing on the 2015 Paris terrorist attacks, carried out by Islamist networks mobilized in NATO’s war in Syria, the PS has imposed an indefinitely extendable state of emergency, giving sweeping powers to police and intelligence services supposedly to fight terror. Hollande took over much of the FN’s programme—imposing a state of emergency, forming a National Guard, and trying to legitimate the Nazi Occupation-era policy of deprivation of nationality—as he sought to fashion a political base to impose austerity and war.

Despite massive opposition and protests against the regressive “El Khomri” labor reform law, the government imposed it without a parliamentary vote, using article 49.3 of French constitution. The unpopular law gives companies more flexibility to fire workers, lengthen the work week and cut wages, and more broadly to negotiate contracts with trade unions that violate France’s Labor Code, effectively scrapping much of the labor protection traditionally enjoyed by French workers.

The emergence of Valls as the currently favored PS candidate is a sign that the PS aims to continue the shift far to the right in bourgeois politics overseen by Hollande.

Italian president “freezes” resignation of Prime Minister Renzi

Peter Schwarz

Italian President Sergio Mattarella has “frozen” the resignation of Prime Minister Matteo Renzi until the budget for 2017 is adopted. Renzi submitted his resignation on Monday evening after voters had rejected his constitutional reform on Sunday by a large majority.

The budget has already been approved by the House of Representatives (Lower House). According to media reports, it could pass later this week in the second chamber of parliament, the Senate, but this is not certain.

What happens after the adoption of the budget is an open question. Mattarella could call for a transitional government. The current finance minister Carlo Padoan and Senate President Pietro Grasso are both under discussion as possible heads of the government. From 2011 to 2013, such a technocrat cabinet under Mario Monti ruled for one and half years, without being legitimized by the electorate, and initiated the brutal austerity measures that Renzi then continued.

The right-wing parties who led the campaign against the constitutional reform are insisting on immediate elections. The Five Star Movement of Beppe Grillo and the far-right Lega Nord sense that the rejection of the referendum provides an opportunity for them to take over the government. Forza Italia, the party of former Prime Minister Silvio Berlusconi, has also called for early elections.

On Monday, Interior Minister Angelino Alfano said that elections in February were possible, although as a result of the rejection of the new constitution there is currently no valid election law. Alfano is chairman of the New Centre-Right Party, which split from Forza Italia three years ago to form a government with Renzi’s Democrats (PD).

The passage of the Budget Law, which the president wants Renzi to oversee, bears the hallmark of Brussels and Berlin. Like Renzi’s entire “reform policies,” its aim is to restructure the country’s debt-ridden banks and Italy’s huge debt mountain at the expense of the working class and poorer layers of the middle class. This policy has already led to a social disaster for large sections of the population. Italian industrial production has declined by 25 percent since the financial crisis of 2008, while youth unemployment remains at nearly 40 percent.

The massive rejection of the constitutional reform was mainly a vote against this policy. Most observers had expected Renzi’s defeat, but assumed a closer result. This proved to be far from the mark. With a voter turnout of 68 percent, high for Italy, 19.4 million voted against the constitutional reform and only 13.4 million voted in favour.

The result was strongly influenced by the level of social inequality in Italy. The poverty-stricken south voted No by two-thirds. Of the country’s 20 regions, only three relatively well-off ones voted Yes: Trentino-Alto Adige, Emilia-Romagna and Tuscany.

The result was even clearer among young voters aged 18-34 years. This layer voted 68 percent against and 32 percent for the reform, although Renzi had tried to use his relative youth (41) and the high proportion of women in his cabinet to appeal to younger voters. Young people are among the main victims of Renzi’s reforms. Nearly 40 percent are unemployed, while the rest just manage with precarious jobs or are looking for work abroad.

Among the 35 to 54 age group, the No votes outweighed the Yes by 63 to 37 percent. Only among older layers over 54 years old did the Yes votes predominate, with 51 percent in support.

In the cities of Rome, Milan, Turin and Bologna, the vote also followed the social gradient. While the Yes vote in the centres outweighed that in the “periphery,” the economically neglected and rundown suburbs voted mainly No.

Spiegel Online commented, “The high turnout in the referendum and the clear anti-government line shows one thing above all: Italians are extremely unhappy with their state, their authorities, their lives. And they have every reason to be.” As in many countries, “economic globalization has also divided Italian society into a tiny rich layer of winners and a large layer of losers.”

Representatives of the EU and the German government are clearly worried by Renzi’s resignation, but reaffirmed at the same time that they would stick to their harsh austerity course. Chancellor Angela Merkel said that she was “sad” about the outcome of the referendum, but Europe would still stick to its course. “From my point of view, we will continue our work in Europe, and we have set the right priorities.”

In business circles, meanwhile, there are growing concerns that Renzi’s defeat could herald the end of the euro and the European Union. Ulrich Grillo, President of the Federation of German Industry (BDI), said, “The risk of new political instability was increasing for economic development, financial markets and monetary union.”

The Centre for Economics and Business Research considers the chance that Italy remains in the euro zone for the next five years to be small. According to the British economics consultancy, the referendum showed that Italian voters would not tolerate indefinitely the chronic unemployment, stagnant wages and Brussels-imposed austerity that now came with euro membership. “There is no doubt Italy could stay in the euro if it were prepared to pay the price of virtually zero growth and depressed consumer spending for another 5 years or so. But that is asking a lot of an increasingly impatient electorate. We think the chances of their sustaining this policy are below 30 per cent.”

Also, in the Financial Times, Gideon Rachman warns, “The European project is under unprecedented strain. Britain’s decision to leave is the most striking evidence of this. But, in the long run, the unfolding crisis in Italy could pose a more severe threat to the survival of the EU. The reasons for this are political, economic and even geographic.”

The EU is a reactionary instrument of the most powerful European business and financial interests. It is responsible for ruthless attacks on the working class, the brutal sealing of the borders against refugees and growing militarism. But there is considerable danger that right-wing organizations will exploit the widespread opposition to the EU and direct it into a reactionary, nationalist direction. Support for the European Union and its austerity policies by the Social Democrats, trade unions and their pseudo-left supporters has created a political vacuum that the far right is seeking to fill.

120,000 coal miners face loss of retirement benefits

Clement Daly

Some 120,000 retired union coal miners and their families are at risk of losing their health care and pensions in the coming months.

The growing insolvency of the various health and retirement funds overseen by the United Mine Workers of America (UMWA) is rooted in the continuing global economic crisis and the resulting collapse of commodities prices, which has led to a string of coal operator bankruptcies, slashed production, and mass layoffs throughout the coal regions.

At immediate risk are health care benefits for 22,600 retired coal miners from Patriot Coal in West Virginia, Indiana, Illinois, Kentucky, and Ohio. The Patriot Retirees Voluntary Employment Beneficiary Association (VEBA) has already sent letters to about 16,100 retired miners informing them that due to critical funding shortages, their health care benefits will be discontinued as of December 31, 2016. Another 6,500 retirees will lose benefits early next year.

The insolvent VEBA plan for the Patriot retirees was brokered between the company and the UMWA following Patriot’s Chapter 11 bankruptcy in July 2012. Unable to reach an agreement on sufficient concessions from the UMWA after months of closed-door negotiations, the bankruptcy court approved Patriot’s reorganization plan in May 2013, granting the company permission to scrap its collective bargaining agreement with the union, and permitting Patriot to cease providing health care to its retirees.

The 2012 Patriot bankruptcy occurred at the beginning of the downturn in the coal industry, which has since transformed into a general collapse. That Patriot was the first of the major coal operators to fall victim to the crisis, however, was no accident, but was deliberately prepared over the course of the last decade.

Patriot was created by Peabody Energy in 2007 as a means of shedding mounting legacy liabilities associated with its union operations east of the Mississippi. Upon its creation, the mining giant sold Patriot 13 percent of its assets, but burdened it with about 40 percent of its health care liabilities.

In 2008, Patriot purchased Magnum Coal—a similar spinoff of union operations carried out by Arch Coal in 2005—which transferred about 12 percent of Arch’s former assets along with 97 percent of its retiree health care liabilities. Both deals left Patriot with more than three times as many retirees than active miners, more than 90 percent of them having never worked a day for the young company.

The UMWA put up no serious resistance to the formation of these shell companies and limited its response to the assault on its members’ living standards to impotent protest stunts, rallies, and a public relations campaign aimed at pressuring the mining companies involved for concessions.

In October 2013, the UMWA, Patriot, and Peabody reached a global settlement that allowed Patriot to cease its contributions towards retiree health care and transfer these obligations to a union-controlled VEBA. The deal was modeled closely on the VEBA set up between the United Auto Workers and the Detroit Big Three automakers as part of the Obama administration’s restructuring of the auto industry.

From the start, the settlement left the Patriot VEBA woefully underfunded, securing a little more than $400 million from the two companies over the next four years, or about one-fourth of the $1.6 billion the union estimated was needed for the long-term funding of retiree health care, which currently costs about $8 million a month.

The UMWA’s concessions, however, proved not enough to return Patriot to profitability as the crisis in the coal industry only deepened.

In May 2015, Patriot filed for bankruptcy again, this time selling the majority of its assets to Blackhawk Mining and transferring its remaining assets and liabilities to an affiliate of the Virginia Conservation Legacy Fund. In its approved bankruptcy plan of October 2015, Patriot and Blackhawk escaped obligations for retiree health care and exited the 1974 UMWA Pension Plan with Blackhawk only agreeing to assume liabilities for any active UMWA miners it rehired at its operations.

In the wake of the Patriot deal, Peabody went into court arguing that Patriot’s shedding of its obligations to retiree health care voided the global settlement reached in October 2013. Having paid out only $165 million of $310 million it agreed to, Peabody reached an agreement with the UMWA in January 2016 to pay only $75 million of its remaining $145 million to the Patriot VEBA. Peabody then filed its own bankruptcy petition in April 2016 from which it has yet to emerge.

Alpha Natural Resources also followed Patriot’s lead, declaring bankruptcy in August 2015. The company won approval to sell its most profitable assets in West Virginia, Virginia, Pennsylvania, and Wyoming 11 months later to a newly created Contura Energy. Its remaining operations were consolidated in a reorganized Alpha.

As part of its restructuring, the court granted Alpha permission in May 2016 to break its contract with about 610 active UMWA miners and cease further contributions for union retiree health care benefits to about 2,600 retired miners, as well as escape from its obligations to the 1974 UMWA Pension Plan.

A subsequent union contract reached in July 2016 with both Alpha and Contura covering 900 miners did not include either retiree health care or pension provisions. Instead, the two companies contributed lump sum payments totaling $28.5 million to a separate union-controlled VEBA, funding Cecil Roberts admitted “would not last long,” considering Alpha had complained about spending nearly $53 million on union health care in 2015 alone.

In addition to the imminent risk to the various UMWA retiree health care plans, the union is warning that its pension plans also face insolvency after recording large loses due to the 2008 economic crash and the growing list of coal operators using the bankruptcy courts to discharge existing liabilities and end future contributions. According to the union, contributions to the 1974 Pension Plan have fallen by two-thirds over the past year.

The UMWA pension funds currently support about 89,000 miners or family members with an average monthly payout of $560, in addition to another 22,000 coal miners who are vested but not yet receiving benefits. If the fund collapses, these liabilities will be assumed by the federal Pension Benefit Guarantee Corporation and will likely be subject to deep cuts.

What is under way is an historic assault on benefits and living standards won through bitter struggles waged by generations of coal miners. The UMWA Health and Retirement Funds has its origin in the massive strike wave conducted by American workers at the close of World War II. In addition to strikes in auto, steel, railroads, meat packing, and other industries, the coal miners waged a series of powerful strikes, some in defiance of back-to-work orders from both the union bureaucracy and the White House, to secure the UMWA Funds in agreements signed in 1946 and 1950.

However, under the leadership of the nationalist and pro-capitalist John L. Lewis, the union tied funding for the UMWA Funds to royalty payments exacted from the coal operators for every ton of coal mined, thus binding the fate of the coal miners to the health of the US coal industry and American capitalism in general. In exchange for the UMWA Funds, Lewis agreed to support the coal industry’s mechanization of the mines—at the cost of hundreds of thousands of mining jobs over the subsequent decades—believing the increased efficiency would lead to increased coal production and thus stable benefits flowing to a slimmed workforce.

In reality, however, the contradiction of this funding mechanism ensured that the UMWA Funds remained chronically underfunded with the union limiting benefits and resisting royalty increases in order to safeguard the health of the coal industry and the solvency of the programs. Now, under conditions of protracted crisis, the coal operators are moving to scrap what remains of these limited health and pension benefits.

In line with the UMWA’s strategy of protecting the profitability of the US coal industry, the union has turned to Congress for a bailout of its insolvent retiree health care and pension plans. It is backing passage of the Coal Miners Protection Act which would allow about $220 million of the approximately $490 million a year in general tax dollars which flow into the Abandoned Mine Lands program for abandoned mine cleanup to be diverted into the UMWA retiree benefit programs over the next decade.

While the legislation currently has bipartisan support, some Republican legislators are opposed to the move claiming it aids only retired union coal miners while doing nothing to insure the benefits of non-union retirees.

Australia: Fair Work Commission backs mass sackings at Essential Energy

Terry Cook

The Fair Work Commission, the federal government’s industrial tribunal, last month effectively cleared the way for extensive job cuts by New South Wales state-owned electricity distribution company Essential Energy.

The job destruction is part of a drive by the NSW state Liberal-National government to slash costs throughout its electricity enterprises. This includes Ausgrid and Endeavour Energy, which are in the process of being privatised.

The tribunal decision removes prohibitions on the use of “involuntary redundancies” in the current enterprise bargaining agreement (EBA). The company will no longer be obliged to offer “voluntary redundancies” and can move directly to sackings. It can impose 600 forced redundancies by July 2018, when a cap agreement ends, and up to 1,000 more in the following year.

Essential Energy originally demanded that workers accept the immediate destruction of 800 jobs as part of negotiations in a long running dispute for a new EBA. It is also seeking to freeze wages for two years, maintain a ban on re-employing redundant workers in permanent positions within two years, halve the amount employees are paid when called in for emergencies, and reduce the wages and conditions of contractors.

In its ruling, the Fair Work Commission (FWC) admitted that the job cuts will have “significant detrimental consequences for individual Essential Energy employees, their families, and the communities in which they live.” Yet it insisted this was “an unavoidable consequence of the economic paradigm in which Essential Energy operates.” It declared that “a significant reduction in the size and cost of Essential Energy’s workforce has become inescapable.”

This openly pro-business rationale, insisting that workers must suffer to cut costs, exposes the claim by the Electrical Trade Union (ETU) and United Services Union (USU) that the FWC is an “independent industrial umpire.”

While the ETU issued a statement making some objection to the ruling, the union handed the dispute over to the tribunal and is wholly responsible for the outcome. In May, without any consultation with its members at Essential Energy, the ETU called off a scheduled 80-hour strike after the FWC granted the company’s application for a suspension of the action on the grounds of public safety.

Subsequently, the ETU asked the tribunal to order the termination of all industrial action. It knew this would trigger a 21-day compulsory arbitration period, opening the way for a deal or a court-imposed settlement.

ETU state secretary Steve Butler declared this was “the best possible outcome” because it “forces the company to sit down and negotiate in good faith.” The union could “put its case to the independent umpire who will then make a final decision.”

The FWC is no “independent umpire.” Introduced by the federal Labor government in 2009, with full support of the trade unions, the tribunal is armed with anti-strike provisions and the power to impose severe penalties on workers. It forms part of the state apparatus, which includes the courts and the police.

Under Labor’s Fair Work laws the FWC and the federal government can also terminate any industrial action deemed to “threaten to cause damage to the Australian economy” or endanger the “welfare” of any part of the population.

The ETU and USU will now insist that Essential Energy workers have no choice but to accept the job cuts, and block any attempt to oppose them.

To head off any potential action against the sackings, the ETU is now claiming that the regional-based National Party’s newly-elected state leader John Barilaro can be prevailed upon to prevent the job cuts.

In a November 23 bulletin, the ETU declared: “New Nationals leader John Barilaro will today face his first opportunity to defend regional jobs and services.” It cited a statement by Barilaro before the March 2015 state election that: “I support lower electricity prices, but I will always lead the charge in protecting local electricity jobs.”

To claim that the Nationals will oppose job cuts is to lead workers into another blind alley. As part of coalition governments, at both state and federal levels, they are slashing thousands of jobs and cutting wages and working conditions across the public service, while gutting essential social services. The state Liberal-National government is currently privatising five regional-based hospitals, at the expense of jobs and services.

No doubt the power unions will also attempt, as they did in the 2015 state election, to promote Labor as a progressive alternative. For electoral purposes, Labor cynically claimed to oppose the government’s plan to privatise the electricity distribution assets.

In reality, Labor began the sell-off before it was thrown out of office in 2011. Once the 2015 election was over, state Labor leader Luke Foley flagged support for privatisation, declaring “private and not-for-profit sectors should play a significant role in the delivery of our public services.”

The FWC decision will strengthen the government’s hand in its assault on workers at Ausgrid and Endeavour Energy, where hundreds of jobs have already been axed with assistance of the power unions. The unions have worked to prevent any unified campaign by power workers to oppose cost cutting and privatisation.

Electricity workers nationally are facing a political offensive by Labor and Liberal-National governments alike, aided at every point by the trade unions.

A stand must be taken against the escalating assault on jobs that is condemning ever-greater numbers of workers and youth to permanent unemployment. A unified struggle by workers across the entire power industry will mean a direct confrontation, not only with the government and the corporate elite, but with Labor and the trade unions, which enforce their dictates.

The defence of jobs, conditions and services requires the establishment of rank and file committees to turn out to all other sections of workers—across the steel, mining, car and engineering industries—facing the destruction of jobs and conditions. This struggle can only be based on a socialist perspective to fight for a workers’ government to reorganise society to meet social need, not private profit.

Long-time leader loses election in The Gambia

Eddie Haywood

The president of The Gambia, Yahya Jammeh, was defeated by real estate tycoon Adama Barrow in presidential elections held Friday.

Jammeh conceded late Friday night on state television, stating “I told you, Gambians, that I will not question the outcome of the results and will accept it.” In a concession call to Barrow, Jammeh stated, “Congratulations. I’m the outgoing president; you’re the incoming president.”

Masses of Gambians celebrated in the capital city Banjul on the news of the autocratic president's defeat.

The presidential elections were held under the shadow of political repression and intimidation. In the months preceding the election, several opposition figures were beaten, arrested, and detained, and international telephone and Internet services were shut down during the election poll. There were widespread reports of intimidation of the press by the Jammeh government.

In April and May, dozens of protesters were beaten and arrested, along with 51 officials of the opposition United Democratic Party (UDP), who are still awaiting trial. The UDP Organizing Secretary, Solo Sandeng, has since died in custody after being tortured. The protestors and officials are being held at the infamous Mile 2 prison near Banjul, known for repression and torture.

Nogoi Njie, the vice chairperson of the young women’s section of the UDP was arrested at the demonstration, and described in an affidavit her ordeal of being detained, beaten, and tortured at the hands of the National Intelligence Agency, the Gambian security agency responsible for scores of forced disappearances, murder, torture, and intimidation of political opponents.

The Gambia was ruled by Jammeh for more than two decades, after he came to power in 1994 in a military coup. As a commander in the Gambian army, Jammeh led a faction of the military and seized power from Dawda Jawara, the corrupt president who ruled for the three decades since The Gambia gained its independence from British colonialism in 1965.

Jammeh joined the Gambian armed forces in 1984, rising to the rank of Second Lieutenant in 1989. Just months before leading the military coup that brought him to power, he received military training at Fort McClellan in Alabama; a clear display of Washington's influence in Jammeh's rise to power.

Barrow, the candidate of the UDP and its former treasurer, is a wealthy real estate developer in The Gambia. He received a university education in London, returning to The Gambia where he was employed by the largest real estate firm in the country. Barrow was supported by all opposition parties in his bid for the presidency.

Clearly enunciating the character of his administration in calling for unity in the ruling class, Barrow displayed his cynicism in an interview with the Associated Press the day after his election win, saying, "A new Gambia is born. We want everybody on board now. This is Gambia, politics is over."

What Barrow really means to say is, ‘The ruling elite needs to continue the exploitation of The Gambia's resources, so quit the political squabbling.’

The jubilation of the masses at Barrow's election is likely to be short-lived, as he is set to take power in a country influenced by Washington which is seeking to assert American capitalism’s hegemony over the entire African continent.

The Obama administration welcomed the newly elected president in an official statement congratulating Barrow on his victory. The administration stated that it “looks forward to being a strong partner in efforts to unify the country, [and] promote inclusive economic development,” clearly a reference to maintaining the current capitalist relations Washington has with the country.

Washington has been increasingly dissatisfied with the Jammeh regime, hypocritically criticizing the autocrat on his repressive rule. In advancing its imperialist aims on the continent, Washington is keen to cultivate an image that it promotes human rights and democratic forms of rule in Africa, and regards various autocratic leaders such as Jammeh as a “stick its eye.”

The predominately Muslim nation is the smallest nation in Africa, with a population just under two million. It harbors great economic resources mainly in the agricultural sector, tourism, and its special location geographically as a center of trade in Western Africa. It also has an abundance of natural resources such as silica sand, titanium, tin, zircon, clay, and fish.

Despite this, The Gambia is one of the poorest nations on earth, ranking 175th out of 188 countries in the United Nations Human Development Index. The vast majority of Gambians subsist in farming and earn around one dollar or less per day.

Like most nations on the African continent, The Gambia is home to crippling poverty and other social ills inflicted on the masses, such as high mortality rates in child birth and diseases due to lack of spending for these basic social services. The Gambia has a high HIV prevalence rate at 2 percent, disastrous considering the country's small population. Besides HIV/AIDS--malaria, hepatitis A, typhoid, and animal contact diseases such as rabies ravage the Gambian population.

These intolerable social conditions are rooted in the class structure of the Gambia, in which a tiny corrupt elite controls the country’s economic resources and wield political power in which the great majority have little to no say.

The “scramble for Africa”, aggressively pursued by Washington to assert its geo-political and economic dominance on the continent in furtherance of control by wealthy Western business interests of Africa's economic resources guarantees massive social and political upheaval not only in The Gambia, but across all of Africa.

Polish parliament approves creation of paramilitary militia

Clara Weiss

The Polish parliament (Sejm) approved the establishment of an army for territorial defence (WOT) in mid-November made up of 53,000 personnel. The parliament thus gave the green light to a project pushed by far-right Defence Minister Antoni Macierewicz.

The new military organisation will be under the direct control of the Defence Ministry. It will support the Polish army in fighting Russia in the event of war, and suppress social and political opposition domestically. Motions by the opposition that the WOT ought to be apolitical, and not be deployed against Polish citizens, were explicitly rejected by the Sejm.

Macierewicz already announced his intention to establish a militia along the lines of the American National Guard in the summer. The Sejm has now voted in favour of this by an absolute majority. By 2019, the force will be comprised of 53,000 people. The first units in the east of the country will be established before the end of the year. By 2019, the government plans to spend 3.6 billion zloty (around €800 million) on the WOT. The monthly remuneration for the militiamen will amount to around 500 zloty (€120).

Macierewicz stated in a television interview, “These units are the most effective way to expand the strength of our armed forces and its defence capabilities. It is also the best response to the dangers of a hybrid war like those we saw in the wake of Russian aggression over Crimea.”

Each of Poland’s 16 provinces is to establish a defence unit of between 3,000 and 5,000 men. The units will be recruited from volunteers, who will be given military training at the government’s expense. Most of the units will be constructed in the eastern regions of Podlachien, Lublin and Podkarpathen, which border Ukraine and Belarus. The east of Poland is the poorest and most economically backward part of the country and is comprised of large forested areas. Given the social catastrophe produced by the restoration of capitalism, fascist forces and the PiS (Law and Justice Party) have been able to transform the region into a stronghold.

The WOT mandate voted for by the Sejm is extraordinarily wide-ranging and openly orients to right-wing nationalism. It states that the WOT is responsible for “anti-crisis, anti-sabotage, anti-terrorist and anti-disinformation deployments, to defend the security of the civilian population and the cultural heritage of the Polish people.” The Defence Ministry, which will command the WOT, will have a free hand to define what amounts to a crisis, sabotage, terrorist attack or disinformation.

Politicians from the governing PiS explained to a parliamentary committee prior to the vote that the WOT had the goal of “strengthening the patriotic and Christian fundamentals of Poland and the armed forces.” The “patriotism and belief of the Polish soldiers” was “the best guarantee of our security.”

They were thereby making an appeal to far-right forces to join the WOT. Several leaders of right-wing parties and citizens’ militias have already indicated that they will encourage their members to join the WOT.

Since taking office just over a year ago, the PiS government has repeatedly strengthened far-right and anti-Semitic forces in Poland. The government has cooperated closely in this with the Catholic Church, which historically has intimate ties with fascism. Defence Minister Macierewicz, who has a fascistic and anti-Semitic past, played a central role in the promotion of far-right forces and their integration into the state apparatus.

The construction of an ultra-right militia in Poland also enjoys international support. The US think tank Atlantic Council advanced proposals in a strategic paper published in July to establish Poland as a bulwark against Russia. Among the concrete measures suggested for the military build-up were an increase in the regular army from 100,000 to 150,000 and the expansion of paramilitary forces under government control. According to the authors of the paper, the various paramilitary groups, including private ones, already comprise some 400,000 personnel.

It is significant that, according to Polityka magazine, the Krakow-based paramilitary organisation Stowarzyszenie Jednostka Strzelecka 2039 participated in NATO’s Anaconda training exercise. A number of these units now intend to join the WOT. Other right-wing and fascist organisations like Falanga and Zmiana plan to participate in the WOT.

The WOT bears similarities to the paramilitary organisations in Ukraine, which have not only fought pro-Russian separatists in the east of the country, but also taken action against opposition throughout the country within the Ukrainian population. Some of the right-wing paramilitary organisations, which played a leading role in the overthrow of Ukrainian President Victor Yanukovitch in February 2014, were trained in Poland. Similarly right-wing forces are now to be trained and established in Poland itself.

The liberal opposition has criticised the founding of the militia from a right-wing bourgeois standpoint. Considerable disquiet has been created by the fact that the militia will not be under the command of the military general staff, but rather the Defence Ministry. The deputy chair of the opposition Nowoczesna Party, Katarzyna Lubnauer, described it as Macierewicz’s “private army.”

Within the Polish army, opposition has emerged to the course pursued by Macierewicz. At the beginning of the year, several high-ranking generals resigned in protest at Macierewicz’s military reforms and agitated in the press against the government.

General Janusz Bronowicz attacked the minister and his military reforms publicly. In an interview with Polityka magazine, he warned that PiS’s policies could lead Poland to a catastrophe like 1939. Bronowicz was one of those who resigned in protest against Macierewicz’s policies earlier this year.

The liberal newspaper Newsweek Polska in a column expressed the fear that the WOT could be deployed by the Defence Ministry against the liberal opposition. This concern is not without justification. There have already been violent attacks on members of the Committee for Defence of Democracy (KOD) by right-wing radicals, which were quite openly supported and promoted by PiS.

In addition, the opposition does not want to lose its influence over the direction of the military. There remain several generals and officers in the leadership of the army who support the liberals’ domestic political programme.

But the liberal opposition has no objections to the strengthening of the armed forces against Russia and its deployment against the working class at home. Some liberal commentators even attacked the parliamentary vote from the right. Some expressed the fear that several fascist organisations seeking to join the WOT pursue an anti-American stance and advocate a closer alliance with the Kremlin.

Others argued that the money allocated would be insufficient to establish well-equipped units by 2019. Like other NATO states, the government should therefore concentrate its resources on equipping its armed forces with modern weaponry and technology, they argued.

Bogdan Klich, who was defence minister under the PO (Citizens Platform) government of Donald Tusk, complained, “The majority of NATO states are investing in an expansion of the potential of existing forces, not in the creation of a territorial defence force. The priority for investments should be the purchasing of new technologies for the waging of modern wars.”

Immigrants protest ill treatment in UK detention centres

Richard Tyler

More than 200 detainees being held in UK immigration centres staged hunger strikes in the three months from July to September this year.

The figures were obtained following a Freedom of Information request submitted by No Deportations, a voluntary group that provides information to those subject to UK immigration controls who do not want to leave the country, for whatever reason.

The Home Office, which is responsible for the detention centres, had initially refused to release the information relating to hunger strikes and suicide. An appeal by No Deportations was made to the Information Commissioner, who ruled that the Home Office had breached the Freedom of Information Act.

The highest number of hunger strikers, 66, was recorded at Brook House detention centre, near Gatwick airport. There were 35 hunger strikers logged at both Harmondsworth (close to Heathrow Airport) and Tinsley House, also near Gatwick.

One hundred nine suicide attempts were made in detention centres over the same period; 649 were placed on suicide watch—nearly 9 percent of those in detention over the period, with the highest number (106) at Brook House. The figures released record 393 attempted suicides in 2015, an increase of 11 percent over the previous year, with 2,957 placed on suicide watch that year.

Theresa Schleicher, the acting director of the charity Medical Justice, which offers independent medical advice and assessments to immigration detainees, told the Guardian the high numbers illustrated “the degree of desperation, frustration and sense of helplessness” faced by detainees.

Schleicher said that several of the hunger strikers seen by Medical Justice had “later been found to have been unlawfully detained and were found to have valid protection claims.”

As well as hunger strikes and attempted suicides, there are a large number of incidents of self-harm by those in immigration removal centres. Over the five years 2011-2015 nearly 11,000 detainees were deemed “at risk” of self-harm, with 1,435 actual incidents being logged.

Stephen Shaw, the former prisons ombudsman and author of a critical report into the welfare of immigration detainees, said, “Levels of self-harm are critical indicators of the health of any institution and the welfare of those in detention. Many detainees are extremely vulnerable and experience high levels of anxiety and depression.”

On Monday last week, a legal challenge brought by Duncan Lewis Solicitors, supported by Medical Justice, was successful in gaining a temporary suspension of the far more restrictive definition of torture introduced by the government in September, and used to keep those affected in detention.

The narrower definition, hypocritically included in a new policy titled, “Adults at risk in immigration detention,” restricted torture to that only carried out by “state authorities.”

Submissions made on behalf of five asylum seekers showed how the restrictive definition had failed to protect vulnerable detainees with a history of ill-treatment, who had been unable to meet the new definition. These included an Afghan male kidnapped and tortured by the Taliban, a Nigerian man beaten and stabbed by a gang for being homosexual, and a Vietnamese woman who was tortured twice by loan sharks for a debt owed by her parents.

At the High Court, Justice Ouseley ruled that the Home Office must revert to applying its original definition of torture, which does not distinguish between state and non-state actors. The full case will be heard in March 2017.

Speaking to the World Socialist Web Site, solicitor Lewis Kett, one of those representing the Duncan Lewis claimants, said the suspension of the restrictive definition of torture could “potentially affect hundreds of immigration detainees between now and the hearing in March, and may lead to many of the most vulnerable detainees being released.”

Commenting on the conditions facing those incarcerated while their asylum claims are evaluated, Kett said, “Detention continues to be an inhumane way of dealing with people pending their applications, especially in those cases where they have been a victim of torture, that they have mental health issues or may be trafficked.

“As a result, it’s not surprising to see hunger strikes and suicide risk in cases where people are either trying to get out of their misery or are protesting against their treatment and continued detention.”

During the court case, the Home Office announced it was reviewing the cases of 340 people identified between September 12 and November 18, who had claimed to be the victims of torture and may have been wrongly detained.

However, the numbers may be far higher, as Toufique Hossain, director of public law at Duncan Lewis, pointed out: “We know from NGO groups and other firms that there are others—given that non-state torture is a common feature in those who are traumatized.”

In August, the Home Office introduced a draft “Detention Services Order” (DSO) providing “guidance” to staff at immigration detention centres on the use of solitary confinement. Under the “Removal from Association and Temporary Confinement” rules, staff are advised that anyone being “stubborn, unmanageable or disobedient” can be placed in solitary confinement. Obliquely called “rule 40 or rule 42 accommodation,” staff can authorise this punishment for up to two weeks.

Where medical advice is that such confinement might prove life-threatening, staff are under no obligation to follow it, with the DSO stating it can be ignored as long as a note is made “clearly stating the rationale.” This can apply to those with serious mental health issues, who may be at acute risk of harm under such conditions.

Human Rights organisation Liberty said, “The use of limitless detention—unashamedly for administrative convenience and far removed from the enforcement of removal decisions—leaves a dark stain on this country’s human rights record.”

Liberty goes on to note considerable evidence suggesting that “segregation is used punitively and retributively as an arbitrary sanction for non-compliance with staff requirements.” It cites reports from Her Majesty’s Inspectorate of Prisons finding that segregation was used at the Harmondsworth Immigration Removal Centre as an “unofficial sanction for non-compliance … when there is no risk of harm to staff or detainees,” contrary to the Detention Centre Rules.

In 2015, the numbers being detained, either pending a decision on their asylum application or their deportation, reached 32,466, up 7 percent over 2014.

These are people who have committed no crime, and yet they are incarcerated in squalid conditions, subject to arbitrary and inhumane treatment by their gaolers, who are often working for private companies. They represent the most oppressed and vulnerable layers of the world’s population. Many are the victims of wars, tyranny and grinding poverty, for which British imperialism bears a major responsibility.

Supreme Court Brexit hearing begins amid growing divisions in UK ruling circles

Robert Stevens

On Monday, the UK’s Supreme Court began a four-day hearing on whether the Conservative government of Prime Minister Theresa May is able to trigger Article 50 of the Lisbon Treaty—to begin the process of leaving the European Union (EU)—without the consent of Parliament.

The case stems from the major constitutional and political crisis sparked by the narrow June 23 referendum vote by the population to exit the EU. It is the most significant to be heard in a British court in modern times.

The government intends to trigger Brexit by the end of March 2017, by invoking the powers of Royal Prerogative—once held by British monarchs and now reserved to the government on the advice of the prime minister and the cabinet.

The government appealed to the Supreme Court, the highest court in the land, to challenge last month’s High Court decision ruling that Parliament alone has the right to trigger Britain’s EU exit. The High Court case was brought by a group of claimants led by Gina Miller, a London-based investment fund manager. They argued successfully that rights conferred by Parliament when it passed the 1972 European Communities Act—paving the way for the UK to join the then European Economic Community—were threatened by Brexit. The High Court accepted their contention that a process leading to the withdrawal of these rights could therefore only be determined by Parliament.

The significance of the Supreme Court hearing was laid out prior to the case by the president of the court, Lord Neuberger. He said the assembling of 11 Supreme Court judges to hear the case was the largest panel constituted since the Law Lords were created in 1876. Cases are normally heard before just five judges, or occasionally seven. The Court’s deliberations are being live streamed on the Supreme Court web site, by the BBC and other news channels, with an estimated 300,000 expected viewers.

Representatives from the UK devolved Scottish, Welsh and Northern Ireland administrations are also in court as interested parties.

What is being fought out in the courts are the fundamental strategic interests of warring factions of the British ruling class—between those who favour remaining in the EU, and the minority faction, which includes the May government but not all of the ruling Conservative Parliamentary party, who favour leaving.

In the aftermath of the High Court ruling, Nigel Farage, a leading Leave campaign figure and then leader of the right-wing xenophobic UK Independence Party (UKIP), threatened to lead a march of 100,000 people through central London to the Supreme Court. Supporters of the Remain camp were preparing to hold a counter-protest. The Farage-led march was cancelled after the organisers, Leave.EU, said they feared it would be hijacked by fascist groups, including the English Defence League and British National Party.

The Leave-supporting media responded to the High Court verdict by describing the judges as “enemies of the people” and accusing them of “treachery.”

On Saturday, the Daily Mail continued its campaign by editorialising, “With only a simple majority needed for a ruling, we therefore find it disturbing that no fewer than five Supreme Court judges have publicly expressed views which appear to be sympathetic to the EU, while six have close links with people who have publicly attacked the Leave campaign.”

The Telegraph led Monday’s front page with the headline, “Don’t defy the people, judges told.” This was in reference to the Attorney General for England and Wales and Tory MP, Jeremy Wright QC, who outlined the government’s case at the beginning of Monday’s session. Wright would say that the government’s opponents were inviting the court “to stray into areas of political judgment rather than legal adjudication,” the Telegraph reported. “The Court should resist that invitation, particularly where the underlying issue is one of considerable political sensitivity.”

Tensions escalated further as the case got underway, with May’s spokeswoman saying threats by Labour and Liberal Democrat MPs to amend any Brexit bill that comes before Parliament if the government loses the case were an attempt to “frustrate the will of the British people.”

The Supreme Court began its deliberations in an extraordinarily febrile atmosphere. Neuberger was forced to warn the media they should not report the names and addresses of Miller and other claimants and their families, as there had been “threats of serious violence and unpleasant abuse” made to them online and in emails.

In his submission, Wright stated that the “foreign affairs prerogative” was not an “ancient relic,” but was essential for the “government to maintain control over strategy, policy and operational matters in conducting our bilateral or multilateral international relationships.”

If May’s government loses the case, it plans to present a mini-bill to Parliament, confirming its intention to proceed with Brexit. Presented as a “compromise”, the government—with a majority of just 13—is desperately seeking to bring its Brexit agenda back under its control. It calculates that Parliament will accept the bill and therefore hand back to the government full control of negotiations with the EU over Brexit that will last a minimum of two years. However, this outcome is unacceptable to the Remain camp, whose leading figures are seeking the reversal of the Brexit vote.

In Parliament, they are supported across party lines, by up to three-quarters of MPs. While a majority of MPs have said they will not block Article 50 being triggered, many are committed to amending any Article 50 bill in order to ensure that their pivotal aim—access for British capital to the EU’s Single Market—is achieved in the EU negotiations. Last Saturday, Labour leader Jeremy Corbyn stated, “When the Article 50 debate comes up, we will put forward an amendment to it, about market access and protections. We want those to be part of the negotiations.”

The bitter divisions in ruling circles cannot be resolved through the courts. The Brexit referendum was called in 2013 by May’s predecessor, David Cameron, as a manoeuvre to stem the growing influence of the Tories’ euro-sceptic wing and to prevent a further haemorrhaging of support to UKIP. As a Leave result was never seriously contemplated, no planning was undertaken by the Cameron government for this eventuality. The Remain campaign, led by Cameron, was only ever intent on implementing the referendum if they got the result they wanted.

The working class must take an independent political stance against both equally reactionary factions of the ruling elite. The pro-Brexit forces are advancing a “Britain into the world” strategy, based on the tearing up of all regulations that hamper the unfettered ability of Britain’s corporations to reap profits. This is premised on escalating the exploitation of the working class in order to “compete internationally.” The pro-EU wing are solely concerned with access to the EU’s single market for UK banks and corporations, and the ability to compete globally as part of the world’s largest trade bloc. Both wings are equally supportive of cuts in immigration and restrictions on the freedom of movement.

This unprecedented crisis in British ruling circles gathers pace amid the ongoing fracturing of the EU. The Remain camp eulogises the EU under conditions where its austerity agenda and the accompanying destruction of living standards is being rejected by millions across the continent. Just hours before the Supreme Court hearing began, Italian Prime Minister Matteo Renzi was forced to resign after the population rejected, in a referendum, constitutional amendments modifying electoral laws to vastly strengthen the prime minister’s powers. The EU supported Renzi’s proposals and their decisive rejection reflects deep opposition to the ruling Democratic Party government and the austerity policies enacted since the 2008 global financial crash.

Shock resignation by New Zealand Prime Minister

Tom Peters & John Braddock

Yesterday New Zealand Prime Minister John Key announced his resignation from politics after eight years in the role and a decade as leader of the National Party. He will formally step down on December 12 after the party caucus elects a new leader.

The sudden announcement appeared to come as a shock to media commentators and the political establishment, including government ministers, who were only informed of Key’s decision a few hours before his media conference. Police Minister Judith Collins told Radio LIVE that she and her cabinet colleagues were “absolutely gobsmacked.”

There was no obvious trigger for the resignation. Key was widely expected to lead the party in the 2017 election. He only offered the trite and unconvincing explanation that he wanted to spend more time with his family and was exhausted with politics.

Key supported his deputy Bill English to take over as prime minister, identifying him as best placed to maintain the government’s continuity. As finance minister, English has been the chief architect of the government’s anti-working class agenda, leading the part-privatisation of several power companies.

Collins and Health Minister Jonathan Coleman are so far the only other candidates to declare their intention to contest the leadership. Collins has pushed draconian “law and order” policies and has links with far-right bloggers. Coleman has overseen the government’s drastic underfunding of the health sector.

Under Key’s leadership, National has won the last three elections and was favoured to secure another term in office. The media have described Key as the country’s most popular leader ever. His government has been touted as a model of stability compared with neighbouring Australia, where in the past six years three prime ministers have been removed in inner-party coups.

In reality, there is seething popular hostility towards the government, with a social explosion building below the surface of daily events. National has imposed severe austerity measures, strengthened the powers of the intelligence agencies to spy on the population and supported US-led wars in Afghanistan and Iraq. Key, a multi-millionaire former trader at Wall Street bank Merrill Lynch, personifies the financial aristocracy that has profited from the global economic crisis at the expense of the working class.

The National Party has remained in power primarily due to the historic collapse in support for the opposition Labour Party, which is discredited among workers because of its support for National’s pro-business agenda and its own pro-market policies while in government. The 2011 and 2014 elections were both marked by record abstention of more than a million people—in a country with just 4.5 million people. Despite National’s sweeping attacks on living standards and public services, Labour is languishing at under 30 percent support in the polls.

The exact reasons behind Key’s resignation have yet to emerge. It takes place, however, in the context of the US election victory of Donald Trump, whose extreme right-wing nationalist and protectionist agenda has sent shockwaves through ruling circles throughout the Asia-Pacific region. Key took it upon himself to warn business leaders last month not to “get despondent” over fears of a new wave of protectionism.

Key was one of the most vocal advocates for the Trans-Pacific Partnership (TPP) trade agreement, which Trump vehemently opposes and, in one of his first policy pronouncements, promised to scrap. In February the New Zealand government hosted the formal signing of the agreement.

Trump will dramatically escalate the US confrontation with China. His threats to impose a 45 percent tariff on imports from China and to label Beijing a currency manipulator, if carried out, would unleash a full-blown trade war, heightening the danger of war between the two nuclear-armed powers.

While Key supports the American military build-up in Asia and has strengthened New Zealand’s alliance with the US, his government has worked assiduously to avoid alienating China, which is New Zealand’s second largest trading partner. Two-way trade with China has nearly tripled over the past decade, rising from $NZ8.2 billion in 2007 to $23 billion in 2016. Annual exports to China have quadrupled and imports doubled since 2007.

Trump’s protectionist policies could have devastating consequences for trade throughout the Asia-Pacific region. At an APEC summit in Peru on November 20, Key warned: “We really like the US being in the region. We think they are great partners, great friends and we think they add something to all the countries there. But in the end if the US is not there, that void has to be filled. And it will be filled by China.”

On November 21, in one of his final acts as prime minister, Key announced the launching of negotiations to upgrade New Zealand’s Free Trade Agreement with China. A few days later Key told a business audience in New Zealand: “Is the world going to stop trading because Donald Trump is fundamentally opposed, or do things in spite of the US?”

Key was not forced from office by any significant “opposition” from the other parliamentary parties. Labour leader Andrew Little responded to Key’s resignation by hailing his “service” in the wake of the global financial crisis and the series of New Zealand earthquakes in 2010, 2011 and 2016. He told Radio NZ Key “has been a very popular prime minister … He’s seen through some pretty difficult periods [and] … given comfort and assurance to people.”

Former Labour Party Prime Minister Helen Clark (1999-2008), now a leading figure at the UN, wrote: “He has advocated tirelessly for NZ internationally these past eight years.”

Labour’s main ally the Green Party similarly extended its “best wishes” to Key. Co-leader James Shaw stated: “Mr Key should be applauded for his commitment to public service and to New Zealand.”

For working people, the legacy of the Key government has been eight years of austerity. Key has overseen thousands of job cuts and a decline in median incomes, almost destroyed the coal mining industry, increased the goods and services tax, cut taxes for the rich and slashed spending on healthcare and welfare services. An estimated one in four children is living in poverty and 41,000 people are homeless due to the soaring cost of housing. Large parts of the country have been de-industrialised and economically shattered. Suicides have reached record levels two years in a row.

The calling of an early election is now possible. However, Key’s departure will in no way lessen the attacks on the working class and the drive towards nationalism, militarism and anti-democratic forms of rule in New Zealand. Labour and the Greens are both parties of big business and agree with National’s agenda to make workers pay for the economic crisis.

The opposition parties have attacked National from the right, joining the anti-immigrant New Zealand First Party in demanding cuts to immigration. The election of Trump has given a definite boost to NZ First, whose leader Winston Peters is demanding similar protectionist policies. Peters has also launched repeated racist attacks on Muslims and Chinese immigrants, scapegoating them for the country’s social crisis.

Whoever wins the next election, Labour or National, may well need NZ First’s support to form a government. Key, however, has repeatedly criticised Labour and the Greens for aligning themselves with NZ First and helping it to promote xenophobia and anti-immigrant policies.