US steps up pressure on Iran with new round of sanctions

Jordan Shilton

The announcement by the Treasury Department Thursday of a new round of sanctions against Iran is part of US imperialism’s aggressive drive to isolate and subjugate Tehran. As well as threatening to unleash an economic crisis in Iran, the sanctions, unveiled just two days after Trump blew up the Iran nuclear accord, also further exacerbated tensions between Washington and the European powers.

The sanctions, presented in a statement posted on the Treasury Department’s website, target six individuals and three companies allegedly tied to the powerful Iranian Revolutionary Guard Corp (IRGC) and its Quds force. Accusing the IRGC of “malign activity,” US Treasury Secretary Steven Mnuchin also blamed Iran’s central bank for assisting the Revolutionary Guards to obtain US dollars through a currency exchange network. Mnuchin added, “We are intent on cutting off IRGC revenue streams wherever their source and whatever their destination.”

Coming just hours after Israel’s aggressive assault on various Iranian positions in Syria early Thursday, which Tel Aviv justified by claiming the Quds force fired a handful of rockets at Israeli territory, the Treasury Department’s sanctions make clear that Washington is steering towards a direct military confrontation with Tehran. The Israeli bombardment, involving 28 warplanes, claimed the lives of as many as 18 foreigners, all of whom were likely Iranian personnel. Even though the Iranian “attack” followed a missile strike by Israel late Tuesday that claimed the lives of eight Iranians near Damascus, marking the third time in less than a month that Israel had caused Iranian casualties, the White House warned Iran in a statement also released Thursday to stop its “provocative” activities and stressed Israel’s right to “self-defence.”

The Treasury Department’s efforts to paint Tehran as the chief destabilizing factor in the Middle East were no less absurd. The sanctions, which it unveiled in conjunction with the United Arab Emirates, were supposedly aimed at curbing IRGC support for “terrorist” groups and Iranian “proxies” in Syria, Lebanon, and Yemen.

Notwithstanding the reactionary political character of Iran’s bourgeois-clerical regime, Tehran’s backing of Hezbollah, a movement with a mass base of support in Lebanon, can hardly be denounced as the funding of “proxies,” least of all by two countries which have poured millions of dollars and weapons into the backing of Islamist militias in Syria. These proxies, which lack any significant popular support and have therefore suffered a series of defeats, have been used by the US to wage a brutal seven-year-long civil war for regime change in Damascus—a war that has claimed over half a million lives.

Moreover, given the IRGC’s significant role in the Iranian economy, including holdings in the construction, energy, and telecommunications sectors, those hit hardest by the new round of sanctions and the reimposition of economic sanctions more generally will be the Iranian working class.

Trump gave the go-ahead for the full reimposition of punishing sanctions on the Iranian economy on Tuesday in his speech abrogating the nuclear deal. After denouncing the deal as “horrible” and “one-sided,” Trump declared that Washington would enforce the highest level of economic sanctions against the Islamic Republic, meaning that the next step in any conflict would involve a resort to military means.

Underscoring the hardline approach the Trump administration plans to take, Mnuchin announced Tuesday that licenses granted to aircraft producers Boeing and Airbus to trade with Tehran would be cancelled. Trump vowed that Washington would also sanction any foreign company that continues to do business with Iran, leaving open a timeframe of three to six months for businesses to wind down their operations.

US imperialism hopes with the sanctions to bully Iran into capitulating to its predatory demands, including the abandonment of Iran’s ballistic missile program and the ending of its support for Hezbollah, Hamas, and other foreign groups. In this way, Washington aims to remove Tehran as a regional obstacle to its consolidation of unchallenged hegemony over the energy-rich and strategically significant Middle East. Two larger obstacles in this agenda are Russia and China, which have their own interests in the region. As if to underscore how their ambitions clash, Beijing announced the opening of a new freight railway connecting western China with Iran the same day as Washington presented its new sanctions.

However, alongside economic pressure, plans are far advanced for all-out war with Tehran. There can be no doubt that Washington was made aware beforehand of Israel’s plans to strike Iranian infrastructure across Syria on Thursday and gave its backing to the aggressive action—not least because the bombardment would weaken the Iranian forces stationed in the country and enable the US and its Islamist allies to strengthen their position in the oil-rich east of the country.

Trump’s decision to scrap the Iran deal and reimpose sanctions has thrown the bourgeois nationalist Iranian regime into crisis. President Hassan Rouhani touted the 2015 agreement as a means for Iran to improve ties with the West and spur economic development. The collapse of this strategy is encouraging representatives of the hardliner faction of the ruling elite, who always warned against cooperation with the United States, to speak out more forcefully. Iranian supreme leader Ayatollah Khamenei raised doubts about the commitment of France, Germany, and Britain to salvaging the nuclear accord, declaring in a speech Wednesday, “I do not trust these three countries either.” An Iranian government statement chastised the European powers for having been “incapable of fully performing” their obligations under the deal “even while the US was nominally a party.”

This bluster notwithstanding, the Iranian bourgeoisie is determined to cut a deal with imperialism. Tehran has already appealed to Airbus to confirm its commitment to sell 100 aircraft to the country in spite of the threat of US sanctions. Meanwhile, Foreign Minister Mohammad Javad Zarif will travel to Europe early next week to negotiate terms for the maintenance of the nuclear accord.

While the European powers, led by France and Germany, took a critical view of Trump’s cancellation of the Iran deal, they also made clear that they will demand additional concessions of Tehran if the deal is to be rescued. This is because the ruling elites in Berlin, Paris, and London are determined to pursue their predatory imperialist interests in Iran and the broader Middle East just as ruthlessly as their counterparts in Washington.

The new round of US sanctions prompted an even sharper response from the European powers, which see their expanding economic interests under threat. Calls are growing for European companies to defy the sanctions, and for the European Union to take measures to protect European companies against fines or other punishments adopted by Washington.

French Finance Minister Bruno Le Maire stated Friday that Europe is prepared to take measures to counter the enforcement of any penalties by the United States against a European firm for doing business with Iran. “We have to work among ourselves in Europe to defend our European economic sovereignty,” he declared in an interview with Europe 1. “Do we accept extraterritorial sanctions? The answer is no,” he told reporters. “Do we accept that the United States is the economic gendarme of the planet? The answer is no. Do we accept the vassalization of Europe in commercial matters? The answer is no.”

Last year, French exports to Iran doubled compared to the previous year, while German exports climbed by around €400 million.

Le Maire advanced three proposals designed to counteract the impact of any US sanctions. The first would be a European-wide blocking statute to prevent US sanctions impacting European firms. He also suggested giving Europe more “financial independence” from the US, including by establishing a body to oversee European trade with Iran, and an agency tasked with following the activities of foreign companies.

In a speech delivered in the western German city of Münster Friday, German Chancellor Angela Merkel struck a similarly critical tone toward US policy on Iran. Trump’s decision had “damaged trust in the international order,” according to Merkel. “Even in tough times, we decide to strengthen multilateralism,” she stated.

US trade war claims China’s ZTE as first victim

Nick Beams 

The US trade war against China has claimed its first major victim with the telecom firm ZTE announcing that the “major operating activities of the company have ceased.”

The announcement, which came in a statement issued to the Hong Kong stock exchange late on Wednesday, is the result of a seven-year ban imposed by the Trump administration on sales of US components to the company last month, claiming it had breached the terms of a settlement of a deal over the company’s sales to Iran and North Korea.

The company operates on a global scale, doing business in more than 160 countries with over 74,000 employees. It generated revenues of $17 billion last year and recorded a profit of more than $700 million. It is the fourth largest smartphone vendor in the US and also supplies equipment for phone and telecommunications networks.

It is one of the largest suppliers of telecommunications equipment supporting networks across Africa and in the Middle East, a business which could now be wiped out. The wireless carrier MTN, which provides networks to 220 million people in 22 countries across Africa, said it was assessing contingency plans given its exposure to ZTE in its networks.

Telstra, the biggest Australian telecom firm, said it would no longer carry its own-branded smartphones made by ZTE because it could not guarantee supply. ATT, the major distributor of ZTE phones in the US has said it is assessing the impact of the ban.

Production at the company’s manufacturing plant in Shenzen ceased in April but employees are continuing to report for work and collect their wages. In its statement ZTE said that “as of now” it still maintained sufficient cash to comply with its commercial obligations.

ZTE said that together with “related parties” it was “actively communicating with relevant US government departments” in order to facilitate the removal or modification of the order banning sales of components to it by US firms.

The Chinese government is directly involved in those discussions. At the meeting at the end of last week in Beijing with a high-level US economic and trade delegation, the Chinese government raised the ZTE case in its list of demands. It pointed to “high concern” over the case and called on the US to “listen to ZTE’s complaints seriously,” and consider the company’s progress in complying with US demands.

How much weight that will carry is another question under conditions where the central axis of US trade policy towards China is aimed at blocking its development in high-tech industries, not least in telecommunications, which it regards as an existential threat to US economic and ultimately military dominance.

Far from pulling back, the Trump administration is reported to be considering imposing further bans on Chinese companies selling telecom equipment in the US on “national security” grounds.

The ban by the Commerce Department has struck a severe blow because it targets one of the key weaknesses of the Chinese telecoms sector. China does not have a highly developed chip-making capacity and ZTE has been forced to rely on the US firms Qualcomm and Intel for the chips used in its devices.

In the longer term, the Chinese government is expected to respond by pouring resources in to the development of chip-making capacity. In its report on the ZTE shutdown the New York Times cited a recent speech by Chinese President Xi Jinping pointing in this direction.

“By tightening our belts and gritting our teeth, we built ‘two bombs and one satellite,’” Xi said. “The next step is to do the same with science and technology. We must cast away false hopes and rely on ourselves.”

In the immediate situation, the US action has brought warnings that it will bring about major disruption in global supply chains.

Christopher Thomas, a partner at McKinsey’s in Beijing, told the Financial Times: “The complexity of this issue is mind-boggling because the electronics value chains are much more complex and globally integrated than they were in the past.”

A technology lawyer cited by the newspaper said the ruling over ZTE would “lead to increased Balkanisation of the tech world, and speed up the tech ‘arms race’ between China and the US.”

The issue of the ZTE ban will likely be raised at talks in Washington next week when a Chinese delegation, headed by chief economic negotiator Liu He, will hold talks with senior economic officials of the Trump administration over US demands that the trade deficit between the two countries be reduced by $200 million within two years. The US has threatened to impose tariffs on up to $150 billion worth of Chinese goods by the end of this month unless progress is made.

The Wall Street Journal reported that China was likely to offer to import more US goods as the main way of reducing the trade gap.

However it noted it was “far from clear whether even a good-faith effort by China to reduce the deficit would be enough to satisfy the Trump negotiating team” because although Treasury Secretary Steven Mnuchin is focused on deficit reduction, the US Trade Representative Robert Lighthizer “has been leading negotiations on more fundamental issues.”

Those issues centre on Beijing’s “Made in China 2025” program which aims at boosting the country to a leading role in high-tech development. Lighthizer and fellow anti-China hawk White House economic adviser Peter Navarro regard the program as a direct challenge to US economic supremacy and the US “negotiating” platform issued in Beijing last week included the demand that it be virtually scrapped.

The ever-more aggressive “America First” program, which is directed not just against China but at all the major US trading partners, is starting to produce shifts in economic relations. This was in evidence at a trilateral summit in Tokyo earlier this week attended by Chinese Premier Li Keqiang, Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae-in.

Standing beside his Japanese and South Korean counterparts, Li delivered a speech calling for closer economic integration between the three countries and for the completion of the Chinese-backed Regional Comprehensive Economic Partnership.

Without directly citing the Trump administration he declared: “In the current circumstances, China, Japan and South Korea should stand even more firmly, uphold the rules-based multilateral trading system and proudly oppose protectionism and unilateral actions.”

Moon and Abe also made similar remarks endorsing free trade and closer economic alignment of the three countries.

In the face of the most significant moves towards global trade war since the 1930s, one of the other characteristics of that disastrous decade—the formation of trade blocs—is also starting to take shape.

Malaysian election: A political shock in South East Asia

John Roberts

Malaysia’s 14th general election on May 9 produced a historic defeat for the authoritarian United Malays National Organisation (UMNO)-led regime that has ruled with an iron grip since the country gained independence from Britain in 1957.

At 9.30 p.m. last night, in Kuala Lumpur’s State Palace, King Sultan Muhammad V swore in 92-year-old Mahathir Mohamad as prime minister. Mahathir headed UMNO and was prime minister in the Barisan Nasional (BN) coalition government from 1981 to 2003. He was installed yesterday as head of the four-party Pakatan Harapan (PH) coalition that handed a humiliating defeat to UMNO Prime Minister Najib Razak and the BN.

Along with the virtual one-party police state of Prime Minister Lee Hsien Loong’s People’s Action Party in Singapore, the UMNO-led autocratic regime had formed the stable political bedrock of the 10-member Association of South East Asian Nations (ASEAN). Its demise represents a regional political earthquake, with implications beyond Malaysia.

Almost all national and international commentators had predicted that, while a majority vote would go to the PH opposition, Najib and the BN would still win a majority of seats in the 222-member national parliament due to their brazen gerrymander of electorates.

Najib’s government also pork-barreled funds for what UMNO considered its heartland—rural, ethnic Malay regions—to ensure a BN victory. A series of dirty tricks, censorship laws and the manipulation of Election Commission regulations disrupted opposition activity throughout the 11-day legal campaign period.

Deep social tensions, however, have thoroughly undermined the anti-democratic and corrupt political mechanisms in place for six decades. Surveys and social media made clear the main concerns of the mass of Malaysians were housing, living costs and jobs, combined with immense hostility toward the ruling establishment.

The monthly legal minimum wage is just 1,000 ringgit ($US253.13). This does not apply to those eking out incomes in the self-employed sector, which in 2017 was 25.6 percent of the workforce. Compared with Singapore, even university graduate jobs are poorly paid.

The PH exploited immense anger over social inequality by promising to remove a regressive goods and services tax (GST) introduced by Najib in 2015. Prior to the GST, only 20 percent of the population paid income tax. The new tax pushed many working-class households over the brink, with increased costs for one third of daily purchases.

The opposition attacked Najib and UMNO over the 1Malaysia Development Fund (1MDB) scandal, in which billions of dollars went missing. According to international investigations, hundreds of millions found their way into Najib’s personal accounts.

The new parliament will consist of at least 122 PH members and supporters and three other independents. Mahathir claims the PH will be able to count on 135 votes.

The BN coalition was reduced to just 79 seats, down from the 133 it held after the 2013 election. Of those, UMNO won only 54. The Islamist Parti Islam se-Malaysia (PAS), which left the former PR opposition coalition in 2015, won 18 seats.

In the PH coalition, jailed opposition leader Anwar Ibrahim’s Peoples’ Justice Party (PKR) will be the largest party in the parliament with 47 seats, followed by the ethnic Chinese-based Democratic Action Party (DAP) with 42 seats. Mahathir’s United Malaysian Indigenous Party (PPBM), formed by a breakaway faction from UMNO, has 13 seats. The PAS breakaway Amanah, which joined PH, holds 11 seats. Another eight seats were won in Sabah in Borneo by the regionalist Warisan party.

UMNO lost control of the Johor state government for the first time. The opposition coalition also won Negeri Sembilan, Selangor, Malacca, Penang, Perak and Perak. The Islamist PAS wrenched Terengganu from the BN.

In urban areas, massive celebrations broke out over the defeat of the UMNO monolith. Its decades-long oppressive rule included the use of anti-democratic laws to economically favour privileged layers of the Malay majority over the Chinese and Indian minorities and the working class of all ethnic backgrounds.

The coalition that is replacing UMNO, however, is the result of a Faustian deal worked out in the interests of other sections of the capitalist ruling class.

What brought the PH coalition together last June, followed by Mahathir’s selection in January as its candidate for prime minister, were common interests in getting rid of Najib’s regime. The coalition parties cynically calculated that Mahathir could attract enough of UMNO’s traditional supporters to win the election.

Mahathir has said he will serve as prime minister for two years, grant a pardon to Anwar Ibrahim after he is released from prison next month, and then stand aside for Anwar, whom he previously sought to destroy, both politically and personally.

Najib jailed Anwar on bogus sodomy charges in 2014 to throttle the opposition. But it was Mahathir who first jailed Anwar in 1999. Anwar had faithfully served as Mahathir’s deputy and finance minister until they split over the response to the 1997 Asian financial crisis.

Anwar championed the demands of the IMF, Washington and the financial markets for the opening up of the economy and an end to UMNO’s protectionism. Mahathir sacked Anwar and when he organised mass rallies against the government calling for reforms, then had him arrested on frame-up charges of sodomy and corruption.

Mahathir remains the figurehead for the dominant factions of the Malaysian capitalist class. His political return was motivated by the deep concerns in ruling circles that Najib’s corruption in relation to 1MDB was so flagrant it risked unleashing mass social discontent.

Mahathir was also bitterly opposed to Najib’s agreement to join the proposed Trans Pacific Partnership (TPP) trade bloc, which he alleged would make Malaysia an economic colony of the United States.

While Mahathir issued nationalist rhetoric against the US and the TPP, other sections of the opposition coalition railed against Najib for giving Chinese-based corporations major roles in infrastructure projects, and promised a review of these investment decisions.

Differences are likely to soon emerge within the new government over a range of fundamental issues—not least the foreign policy orientation. Until now, Malaysia has sought to balance between the US, with which it has close military and strategic relations, and China, which is its largest trading partner.

As US imperialism and its Japanese and Australian allies escalate tensions with China, the ruling class of Malaysia and every other country in Asia is being forced to choose which power it aligns with.

House of Lords Brexit revolt hits Conservatives and Labour

Paul Mitchell

Theresa May’s Conservative government suffered another defeat in the House of Lords on Tuesday, as peers voted for an amendment to the European Union (EU) withdrawal bill. They said that remaining in the European Economic Area (EEA) should be a Brexit negotiating objective.

The EAA, which includes countries such as Norway and Iceland, is a flexible version of the single market offering most of the benefits of a customs union without being subject to institutions such as the European Court of Justice or the common agriculture or fisheries policies.

Earlier in the day, the Lords also voted to remove the Brexit date of March 29, 2019, from the withdrawal bill and agreed on an amendment to allow the UK to replicate any new EU law in domestic law and continue to participate in EU agencies after Brexit.

The 247-to-218 vote in favour of the EAA amendment is being described as an “unexpected triumph” for a cross-party group that included the Liberal-Democrat party’s 100 or so peers, 83 Labourites—nearly half the party’s total—who defied the whip, 17 Conservative “rebels” and most crossbench (unaligned) members.

The defeats came on the final day of debate on the bill in the Lords. It will be sent back to the House of Commons for further discussion, and the government hopes it will appear on the statute book before the end of May.

A Department for Exiting the European Union spokesperson said, “The referendum was a vote to take control of our borders, laws and money. Ongoing participation in the EEA would mean having to implement new EU legislation automatically and in its entirety without having a say on how it is formulated—and it would also mean continued free movement. We will now consider the implications of this decision.”

The defeat, the 13th so far for the government, is a major setback for May, who was forced to agree to a humiliating deal with the EU on the proposed Brexit transition period. She abandoned all her “red lines” and agreed to abide by European Court of Justice rulings, to continue paying into the EU budget and ensure EU citizens full rights, including free movement, for a number of years, whilst also agreeing that the UK will have no representation or say in EU decisions taken during the transition.

Since then, for fear of splitting the Conservative Party, she has ruled out a customs union but prevaricated over two possible post-Brexit trading models proffered by her cabinet Brexit subcommittee. One is a “customs partnership” under which the UK would collect EU import tariffs on behalf of Brussels: the other is a “highly streamlined” maximum facilitation, or “max fac” customs check arrangement favoured by the hard Brexiteers.

Last week, May failed yet again to make a final decision on the preferred customs option after a Brexit subcommittee meeting during which Foreign Secretary Boris Johnson, Home Secretary Sajid Javid, Defence Secretary Gavin Williamson, Environment Secretary Michael Gove, and the International Trade secretary, Liam Fox, spoke “forcefully” against the “customs partnership.”

May, along with Chancellor Philip Hammond, Northern Ireland Secretary Karen Bradley, and Business Secretary Greg Clark, supports the partnership proposal. On Sunday, Clark said that customs checks would be a nightmare for big business. “Frictionless trade” was “something that we’ve made a public commitment to and we need to make sure that we get that right,” he declared.

Clarke’s comments were anathema to the hard Brexiteers who thought they had extinguished the partnership model, referring to it as a “dead parrot.”

On a visit to Washington Tuesday, shortly before the EAA vote, Johnson launched a tirade against the partnership proposal as “a crazy system whereby you end up collecting the tariffs on behalf of the EU at the UK frontier …. If the EU decides to impose punitive tariffs on something the UK wants to bring in cheaply there’s nothing you can do.”

“That’s not taking back control of your trade policy, it’s not taking back control of your laws, it’s not taking back control of your borders and it’s actually not taking back control of your money either, because tariffs would get paid centrally back to Brussels,” he said.

May was not strong enough to publicly rebuke Johnson, but a Number 10 spokesperson repeated that the proposal was still an option. Dominic Grieve, the Conservative former attorney general and a backbencher in favour of continuing customs union membership, leapt in to declare, “I don’t think [Johnson] is in any way inhibited by normal propriety in government.”

“I can see why, in view of the difficulties and the divisions, [May’s silence] may be an exercise in restraint on her part but it doesn’t make it any more desirable that a cabinet minister should express himself in the pages of the Daily Mail in this fashion.”

Grieve suggested that “there are an overwhelming number of members of parliament who think that a continuing relationship with the EU, facilitating frictionless trade, is absolutely essential for our economic interests.”

The EAA vote is also a crisis for Labour Party leader Jeremy Corbyn, whose peers were under orders not to support the amendment, which was tabled by a Labour peer, Lord Alli.

The issue of Brexit has long been a focus of the efforts of Labour’s right wing to oust Corbyn. They will now increase pressure on him to endorse membership of the Single European Market and a second referendum on British withdrawal from the EU.

The Blairites not only centre their hopes to arrest Brexit on encouraging sympathetic Tory MPs to rebel against May when parliament votes on the end deal. Former Prime Minister Tony Blair has pleaded openly with the Tories to recognise that the defeat of Brexit is the best means of preventing a Corbyn-led government. Brexit would cause major damage to “Britain’s geo-political standing” and the West’s ability to challenge the rise of competitors—most notably China and Russia—he has said.

Following the EAA vote, Chuka Umunna, the Labour MP who heads a pro-Remain cross-party grouping that includes senior Tories and business groups, demanded the Corbyn leadership stop dithering and state its position. “The time for constructive ambiguity is over—our members and our voters will be delighted with this clear signal that we will not go along with this Tory Brexit,” he declared.

Labour MP Owen Smith, whom Corbyn was forced to sack from his front bench in March after he called for a second referendum, tweeted, “Despite the Whip, Labour Peers voted in significant numbers tonight and have won the vote to keep the option of Single Market membership on the table—ensuring the Commons will now have a vote to do the same. Democracy in action!”

The People’s Vote campaign, which is calling for a referendum on the final Brexit deal, called both May and Johnson’s proposals unworkable. It issued a statement from Labour MP Rupa Huq saying, “To put jobs first, to protect the Irish peace process and to give our young people a future we should stay in the customs union and single market and put any final Brexit deal to a people’s vote.”

Argentine financial crisis could signal broader turbulence

Nick Beams

Argentina’s decision on Tuesday to ask the International Monetary Fund (IMF) for financing to help stem the slide of the peso has raised the question of whether this could be the start of a crisis affecting other so-called emerging markets.

Argentine President Mauricio Macri announced he was going to the IMF after three interest rate hikes in ten days by the country’s central bank—the latest lifting its rate to 40 percent—failed to halt the sell-off.

Argentina is seeking a “flexible line of credit” (FCL) of some $30 billion, to come without conditions attached by the fund. Whether the country obtains such a stand-by facility is another question. The IMF stipulates that FCLs are designed for countries with “very strong fundamentals and policy track records.”

IMF managing director Christine Lagarde issued a statement saying Argentina was a “valued member” of the IMF and discussions had begun on “how we can work together to strengthen the Argentine economy.”

Those words sound an ominous warning for the mass of the Argentine people who recall only too well the devastation imposed under IMF intervention in 2001, when one in five workers lost their jobs, banks closed and the peso lost two thirds of its value.

The Argentine crisis forms part of a developing global turbulence in which a number of countries with high debts are coming under pressure because of rising interest rates and an appreciation in the value of the US dollar.

As the Financial Times noted in a comment earlier this week, the Argentine crisis of 2001 did not spread to other markets. “Yet this time, Argentina’s woes are not isolated. Not only is there a global cause, in the stronger dollar and rising interest rates, but there is also fairly widespread weakness.”

Turkey may be next in line, with the lira hitting a record low this week. President Recep Tayyip Erdogan announced yesterday that together with his top economic advisers he would take action to curb inflation and halt the slide in the currency. But no specific measures were announced. Turkey’s central bank may be forced to again lift interest rates after earlier raising its rate by 75 basis points.

A government statement said the central bank would continue to use the instruments it had in its possession and “in the period ahead our country will continue on the path of growth-based policies.” These statements are considered unlikely to calm market movements. The lira has fallen for months due to widening current account deficit and rising inflation.

The Turkish economic situation is complicated by elections on June 24, both for the presidency and parliament. The government is seeking to make economic concessions to voters amid fears that the elections could be closely run.

The lira has lost about 13 percent of its value against the dollar since the start of the year, sparking fears this could cause problems for corporations that have large dollar-denominated debts.

Indonesia is also being adversely affected. Its stock market is on a downward trend and interest rates on government bonds are rising. The rupiah is down to a 28-month low against the dollar. International investors have dumped $2.2 billion worth of stocks and bonds since the beginning of April, and the central bank is considering raising interest rates for the first time since 2014.

A report on Bloomberg noted that foreign investors own almost 40 percent of Indonesian government bonds, among the highest in Asia, making “the economy especially vulnerable to a slump in sentiment and sharp outflows.”

Besides Argentina and Turkey, the Institute for International Finance has said that Ukraine, China and South Africa are most vulnerable to changes in “risk appetite,” while “asset valuations look most stretched in Hungary, Korea, Thailand, Poland and the Czech Republic.”

Last month the IMF warned that 40 percent of sub-Saharan economies were at high risk of debt stress because they were struggling to finance foreign currency debts after their currencies had depreciated.

One of the key factors driving the rising turbulence is the expectation of further interest rate rises in the US. The Federal Reserve is on course for a further quarter percentage point rise at its next meeting in June.

The impact of US interest rate rises on emerging markets was addressed by Fed chairman Jerome Powell in a speech delivered in Europe earlier this week. He spent some time on the “spillover effects” of US policies.

The basic theme of the speech was that “normalization” of monetary policies in the major economies should continue to prove “manageable” for emerging markets and “markets should not be surprised by our actions if the [US] economy evolves in line with our expectations.”

But Powell did not dismiss “the prospective rises emanating from global policy normalization. Some investors and institutions may not be well positioned for a rise in interest rates, even one that markets broadly anticipate. And of course future economic conditions may surprise us as they often do.”

Besides the rise in US interest rates and the dollar, other factors causing market turbulence include the impact of the intensifying trade war between the US and China, and the fallout from the US decision to unilaterally withdraw from the nuclear deal with Iran.

In 1998, when the Thai baht collapsed, setting off a major crisis throughout South East Asia, US President Bill Clinton referred to it as a “glitch” on the road to globalisation. But the Asian financial crisis rebounded on the US with the collapse of the Long Term Capital management. That required a bailout by the Federal Reserve lest it set off a meltdown in US financial markets.

It is not yet clear whether the present market instability will have a similar impact. However, the Argentine crisis and the tremors in emerging markets could be warning signs that the financial house of cards created by the pumping of trillions of dollars into the financial system since the crisis of 2008 may be starting to shake.

Australian High Court citizenship ruling disqualifies five more MPs

Mike Head

Australia’s parliamentary order was thrown into further turmoil yesterday when the country’s supreme court imposed a strict new test of sole citizenship to disqualify a Labor senator whose father happened to be born in Britain. Four other members of parliament, facing removal on the same basis, quickly quit their seats.

Just a day after the Liberal-National government handed down the federal budget—the last before a possible early election—the High Court took to a new level a purge of parliament to clear out anyone lacking “unqualified allegiance” to Australia.

The seven judges, who sit atop the judicial arm of the capitalist state apparatus, took their hardest line yet in applying a reactionary provision in the country’s 117-year-old constitution. Section 44(i) forbids anyone from standing for election to the federal parliament if they hold, or are entitled to claim, dual citizenship, even if, according to the court, they have no knowledge of that other potential “allegiance.”

The unanimous verdict takes to 15 the number of MPs undemocratically removed on this basis since the middle of last year, in an unprecedented judicial intervention into the political system. Further MPs, including government members, might be challenged following the latest ruling.

In effect, the court is reshaping the political order along nationalist and patriotic lines amid intensifying global geo-strategic tensions and danger of war, particularly between the US, China and Russia. The purge over dual citizenship dovetails with an escalating campaign against “foreign interference” in Australia, a witch-hunt directed primarily against alleged Chinese influence in business, politics and universities.

As soon as the judges disqualified Australian Capital Territory senator Katy Gallagher, her Labor colleagues Susan Lamb, who held the seat of Longman in Queensland, Josh Wilson (Fremantle, Western Australia) and Justine Keay (Braddon, Tasmania) resigned, along with Centre Alliance MP Rebekha Sharkie (Mayo, South Australia). A by-election was already due in Perth, Western Australia after Labor’s Tim Hammond quit, citing family reasons. The five by-elections may now be held on a single day in June or July.

No government members are among the latest batch to be ousted, so the Coalition’s bare one-seat majority is not directly at stake. Nevertheless, the by-elections could become a test of Prime Minister Malcolm Turnbull’s survival, just weeks after his government handed down a pre-election budget on Tuesday.

Equally, the by-elections could determine the future of Labor Party opposition leader Bill Shorten. His leadership is reportedly under question inside his ranks after he rejected moves to refer the four Labor MPs to the High Court last year. Shorten has come under fire in the corporate media for demagogically posturing as an opponent of the government’s budget plans for massive tax cuts for companies and high-income recipients.

If the ousted MPs successfully stand for re-election, they will hold the seats only until the next election, which could be held as early as August 4. This extraordinary upheaval, which is further discrediting the political establishment in the eyes of millions of people, can be understood only from the standpoint of an underlying political shift.

The court’s ruling is thoroughly anti-democratic, as is the constitution. Because of the increasingly diverse, immigrant, population of Australia, about half its citizens and their children are now barred from standing for parliament. One of the judges, Justice James Edelman, insisted “there is no absolute right for every citizen to participate in representative government by nomination for and election to the Commonwealth Parliament.”

If citizens can be barred from standing for election for lacking “undivided allegiance” to Australia, what is next? Will the same test be extended to voting rights, or public service employment, or welfare entitlements, which are already being stripped from newly-arrived migrants?

The judges went even further than their rulings last year, in which they insisted that MPs must owe “sole loyalty” to Australia. They effectively overturned a 26-year-old officially-recognised exception to the citizenship rule. That exemption, which the court itself applied last year in a case involving a government minister, permitted people to nominate for parliament if they had taken “reasonable steps” to renounce their potential citizenship rights in another country.

Yesterday, the judges decreed that the exception applies only if a foreign state “irremediably prevented” a person from renouncing their citizenship or presented an “insurmountable obstacle.” This new rule would probably operate only if another country denied renunciation altogether or if the process involved doing military service or entering a war zone.

This interpretation extends the anti-democratic character of section 44 (i), which proscribes anyone from standing for parliament who has “allegiance, obedience, or adherence to a foreign power” or is “entitled” to the “rights and privileges of a foreign power.” All five MPs removed this week supposedly remained entitled to British citizenship when they nominated for election, even though they had applied for renunciation.

In Gallagher’s case, the judges rejected her argument that by sending off renunciation forms to the British Home Office by April 20, 2016—almost six weeks before she nominated to become a senator—she took every step within her power to renounce her citizenship. Her renunciation was not registered until August 16, two weeks after she was elected.

The verdict means that anyone contemplating running for election must initiate proceedings months in advance to ensure they have renounced any possible foreign “rights and privileges.”

Significantly, not only did the five MPs go without a whimper, there has been no opposition whatsoever within the political establishment to the reactionary ruling. Instead, Labor leaders, including Shorten, said they respected the High Court’s decision, while the government enthusiastically celebrated it.

Both the Liberal-National and Labor leaderships have refused to support calls for a referendum to remove or modify section 44(i). As for the Greens, they have been the most vociferous champions of the disqualifications since last year, when two of their senators were the first to resign after doubts were raised about their eligibility.

Last year MPs agreed to establish a parliamentary “Citizenship Register,” compelling all MPs to produce documents, going back to the birth of their grandparents, to prove their sole Australian citizenship.

Over the past two years, media-driven “investigations” have vilified political and business figures, Chinese-born Australians and Chinese students studying in the country as a potential fifth column of the Chinese “communist” regime. A recent book by academic Clive Hamilton, a Greens member, accused Beijing of planning to take over Australia, and declared that a US-led war against China could be the only way to prevent it.

Far-reaching “foreign interference” bills are currently being pushed through parliament that effectively will prohibit any political activity linked to an overseas person or entity, and attack free speech, especially anti-war dissent.

As the Socialist Equality Party warned last September: “Under conditions of immense war tensions internationally, tremendous economic uncertainty and rising class antagonisms, [this campaign] is being used to amplify a decades-long effort to divert and disorientate the population through nationalism and xenophobia.

“The demand for unquestioned ‘allegiance’ on the part of the parliamentary servants of the capitalist state is intended as a benchmark for implementation throughout society. Anyone who opposes the policies of the government will be labelled ‘un-Australian,’ a servant of foreign interests, or, under conditions of war, downright treasonous.”

Google, Amazon assist in blocking encrypted communications

Will Morrow

Google and Amazon are assisting authoritarian governments in the Middle East aligned with Washington to censor the internet and prevent the use of encrypted communications by their populations.

On May 1, the developers of the Signal encrypted messaging application revealed that over the previous month, Google and Amazon took steps to stop Signal from continuing to bypass censorship measures in place in Egypt, Oman, Qatar and the United Arab Emirates. Workers, youth, journalists, lawyers and human rights advocates will no longer be able to use the application to send encrypted messages and evade government surveillance.

All of these affected countries are ruled by blood-soaked and repressive regimes. Egypt is run by General Abdel Fatteh el-Sisi’s military dictatorship, which came to power in a US-backed military coup in 2013 through the overthrow of the elected Muslim Brotherhood president Mohamed Morsi and the slaying of more than 1,600 of his supporters on the streets of Cairo. In the five years since, el-Sisi’s government has rounded up and imprisoned some 60,000 opponents and sentenced 1,000 to death in political trials. The UAE, Qatar and Oman are controlled by despotic monarchies.

Around December 2016, these governments instructed internet service providers to begin blocking all traffic to Signal’s servers. In response, Signal implemented a change to its software code, known as “domain fronting,” to make its web traffic appear to service providers and censors as though it were directed to Google’s web domain (google.com). This allowed users to continue using the messaging service just by updating the app on their phones.

Sometime in mid-March, 2018, however, Signal received a 30-day advance notice from Google that it was introducing internal changes to stop domain fronting. The changes came into effect on April 16.

When Signal’s developers announced plans to switch from Google to the web domain of Amazon’s online marketplace in the Middle East, Souq.com, Amazon quickly sent a letter in late April warning that it would “immediately suspend” Signal if “you use third party domains without their permission.” Then on April 27, Amazon modified its system architecture to prevent domain fronting altogether.

The practise of domain fronting requires that the “front” be a widely-popular service. In order to block Signal, government censors would previously have had to block traffic to Google or Amazon’s online market as well. According to Signal’s public statement, the changes by Google and Amazon mean there is no alternative to prevent government censorship of its application.

The change has implications beyond Signal. Other applications aimed at allowing users to evade surveillance and censorship, including the secure and anonymous web browser Tor, as well as the Great Fire Free browser, which is specifically designed to evade the Chinese government’s internet firewall, also reportedly rely or have relied on some form of domain fronting.

Explaining its decision to end domain fronting in a statement to the Verge, Google claimed that it “has never been a supported feature at Google” but that “until recently it worked because of a quirk of our software.”

Yet in 2014, Google’s CEO Eric Schmidt co-wrote a New York Times op-ed declaring his support for such measures, claiming that “obfuscation techniques—when one thing is made to look like another—are also a path forward. A digital tunnel from Iran to Norway can be disguised as an ordinary Skype call … and the collateral damage of blocking all traffic is often too high for a government to stomach.”

In the intervening period, Google and the other technology giants have completely integrated themselves into the campaign for internet censorship and surveillance by the US intelligence agencies.

Under changes introduced in April 2017, Google has begun censoring left-wing, socialist and anti-war websites, principally the World Socialist Web Site, by removing and demoting links to these publications in its search engine results. Under the banner of combating Russian-backed “fake news,” Google and Facebook have hired thousands of content censors, largely drawn from the intelligence agencies, to monitor content that is posted online, assisted by a rapidly expanding network of artificial intelligence algorithms.

There is no doubt that the coordinated decisions by Google and Amazon, which have vast foreign-policy implications for Washington, were made in close consultation with the State Department and CIA in order to assist their allies in repressing their populations. The change also assists the censorship efforts of the Russian government, which in mid-April, after Google announced it was ending domain fronting, ordered the shutting down of the Telegram secure messaging service, and sought to prevent it from using domain fronting.

Middle East teeters on brink of region-wide war after US withdrawal from Iran deal

Jordan Shilton

Tuesday’s decision by President Donald Trump to withdraw from the Iranian nuclear agreement has pushed the Middle East to the brink of a catastrophic regional conflict that could rapidly draw in the major powers.

Within minutes of Trump’s announcement, Israeli fighter jets violated Syrian airspace to launch a missile strike on a government base close to Damascus. The strikes caused the deaths of 15 people, including at least seven Iranian military personnel stationed in the country to support the regime of Syrian President Bashar al-Assad.

The situation escalated further late Wednesday, as reports emerged of Israeli shelling of Syrian army positions from the Golan Heights. Rocket sirens sounded in the north and explosions were heard. According to the Golan Regional Council, several towns in the region were targeted by rocket fire.

The Israeli military released a statement early Thursday accusing Iran’s Revolutionary Guard Corps’ Quds force of firing 20 rockets at army border posts in the Golan. It claimed several projectiles had been intercepted and reported no injuries.

According to the Syrian state news agency, Sana, Israeli war planes began firing missiles at targets near Damascus early Thursday, soon after the alleged Iranian attack. As of this writing, the extent of these air raids and whether they caused any casualties remain unclear.

Tel Aviv justified Tuesday’s air strike with the unsubstantiated claim that Tehran was preparing to strike Israel in retaliation for a raid on the T4 airbase in April that claimed the lives of nine Iranians. The absurdity of such allegations is obvious, given that Iran would have nothing to gain from being the first to launch an attack just as Trump was set to announce his decision on the Iran nuclear agreement.

Everything points to the Israeli attack having been closely coordinated with the US. On Sunday, Israeli media began reporting unverified allegations of an Iranian plot to strike targets in Israel. Then on Tuesday, CNN reported that the Pentagon was concerned about alleged preparations for an Iranian strike.

In light of this, it is all but certain that the right-wing government of Benjamin Netanyahu, informed in advance of Trump’s decision, planned the aggressive strike on the Syrian airbase to coincide with the US announcement, with the aim of provoking a response from Iran that would serve as the pretext for a wider military assault.

The air strike was accompanied by a campaign to whip up a war fever in Israel. Amid the reports of an immanent Iranian attack, the military revealed that it had deployed additional batteries for Israel’s Iron Dome missile defence shield in the north, while the US embassy in Tel Aviv prohibited US government employees from traveling to the Golan Heights without prior authorization.

Speaking from Moscow, where he traveled to secure Russian assent to Israel’s continued targeting of Iranians in Syria, Netanyahu preposterously compared the Tehran regime to the Nazis. He belligerently asserted Israel's right to “defend itself” from “Iranian aggression,” and alleged that Iranian forces were using Syria as a base to move troops and lethal weapons into position for an attack.

Underscoring that Tuesday’s air strike is merely a foretaste of what is to come, an Israeli government defence official told Haaretz, “The strikes on the Iranian missiles in Syria are a drop in the ocean. Even the army understands that this won’t prevent missiles and other systems from arriving in the area and we’re seeing that happen.”

Trump’s abandonment of the Iranian deal is only the latest in a long line of reckless actions by US imperialism that have emboldened the unstable Zionist regime to provoke a military conflagration across the Middle East.

Israel's bombing of Iranian targets inside Syria has been intensified following the US air strike on pro-Assad forces in early February that killed dozens of Russian military personnel in Deir Ezzor province.

Over the past month alone, Israel has struck inside Syria on at least three separate occasions, including Tuesday’s strike, killing dozens of Iranians.

Washington is encouraging Israel to go on the offensive as it prepares for war with Iran. In Syria, where the US has sought, in collaboration with Islamist “rebels,” to overthrow the pro-Iranian Assad regime for over seven years, killing hundreds of thousands of Syrians in the process, American forces are focused on thwarting attempts by Iran to open up a land bridge from Tehran to Damascus. To this end, US air power and ground forces have been directed towards holding territory in the east of Syria near the Iraqi border—territory that is also home to much of the country’s oil reserves.

In its drive to consolidate control over the energy-rich Middle East, Washington is determined to confront Russia in Syria, even at the risk of inciting a conflict fought with nuclear weapons.

Trump made clear in Tuesday’s White House address announcing Washington’s withdrawal from the Iran nuclear agreement that plans for war with Iran are far advanced. He announced that the highest level of economic sanctions would be imposed against the country, indicating that the next step in an escalation of the conflict would involve military force.

That Trump is aware of this fact was clear from the tone of his speech. The president of a country that has waged virtually uninterrupted war over the past quarter-century in the Middle East and Central Asia denounced Tehran as the leading “state sponsor of terror” in the world. In language usually reserved for enemy nations during a war, Trump ranted against Tehran's “malign and sinister” influence across the Middle East.

On Wednesday, Trump issued a bellicose threat to Iran, warning that it would face “very severe consequences” if it restarted its nuclear programme.

Under these conditions, the bourgeois-clerical regime in Tehran, confronting a deepening crisis, may conclude that its only option is to fight back. Representatives of the hard-line faction, including the head of the powerful Revolutionary Guard Corps, have already proclaimed the nuclear accord dead and dismissed claims by the European powers that it can be revived without Washington.

While a clash between Israel and Iran poses the most immediate war threat in the Middle East, Trump's torpedoing of the Iran deal has further destabilised an already explosive region. Apart from Israel, his announcement received endorsements from Saudi Arabia and the United Arab Emirates, two countries bitterly hostile to Iranian influence in the Persian Gulf. Riyadh has waged a genocidal war in Yemen since 2015 against Houthi rebels it claims are backed by Tehran.

In a speech last May, Trump called for Saudi Arabia to take a leading role in the formation of an anti-Iranian alliance across the region. His administration, following from where Obama left off, has supplied weaponry and intelligence to enable Saudi aircraft to continue their murderous bombing raids in Yemen, which have killed tens of thousands of civilians.

Just days prior to Trump's announcement, it was revealed that US special forces have been operating in Yemen since December 2017.

As oil rose to over $77 in the wake of Trump’s Iran announcement, Saudi officials declared they would consult with the UAE on increasing oil production to stabilise prices, a move that would severely impact Iran.

Seizing on missiles fired into Saudi Arabia by Houthi rebels Wednesday, Saudi Foreign Minister Adel Al-Jubeir blamed Iran for the attack, which he said amounted to a “declaration of war.” Iran has to be “held accountable for this,” he ominously declared. “We will find the right way and at the right time to respond to this … We are trying to avoid at all costs direct military action with Iran, but Iran's behavior such as this cannot continue.”

Al-Jubeir also vowed that should Tehran restart its nuclear programme, Riyadh would take steps to acquire nuclear weapons.

Sri Lankan president makes anxious calls for political unity

K. Ratnayake

President Maithripala Sirisena opened a new session of the previously suspended Sri Lankan parliament yesterday with a desperate appeal for unity within the ruling coalition and among all other parliamentary parties.

The speech was a response to ongoing government in-fighting, mounting economic problems and growing opposition from working people across the island.

Voicing the fears of a section of the ruling elite, Sirisena declared: “This is not a time for parties to engage in a power struggle. It needs to deflect the power struggle between the parties in the national unity government and between the government and opposition.” Sri Lanka, he said, faced “a colossal debt burden.” It was, he declared, “the last chance [for the government]…to steer this nation forward.”

Last month, Sirisena suspended parliament until May 8 in response to sharp divisions within the ruling coalition—an alliance between the United National Party (UNP), led by Prime Minister Ranil Wickremesinghe, and Sirisena’s Sri Lanka Freedom Party (SLFP).

Divisions within the SLFP widened to breaking point last month after the resignation of sixteen of the party’s government ministers who endorsed an opposition no-confidence motion against the prime minister. The resolution was moved by the SLFP faction headed by former president Mahinda Rajapakse. The resigned ministers yesterday sat on the opposition benches in the parliament.

On May 1, Sirisena and Wickremesinghe were forced to make a fourth reshuffle of ministerial positions since the fragile coalition government was formed after the August 2015 general election. It was the second change since February this year. Ministerial positions are being used in an attempt to glue together the coalition and the internally divided parties that comprise it. The UNP has made several changes to its party leaders and has promised a new look for the government.

The government crisis came into the open after the humiliating defeat of the SLFP and UNP in February’s local government elections. Rajapakse’s newly formed front, the Sri Lanka Podujana Peramuna (SLPP), won control of a majority of local government institutions. Sirisena hypocritically blamed UNP policies for the election defeat.

Rajapakse was ousted in the January 2015 presidential elections as millions of Sri Lankans rejected his anti-democratic regime and its attacks on living conditions and social rights. Local election support for his SLPP was not an indication of popular backing for Rajapakse, but was a protest vote against the ruling coalition government’s brutal austerity program.

In his speech to the parliament yesterday, Sirisena claimed that the government had made important changes, including “restoring the rule of law, making the judiciary independent, reconciliation and winning back the good will of the international community.”

He claimed that the government has “raised income levels while fighting to tackle the debt” and had made “progress” in education, health services and agriculture.

But instead of “progress,” Sri Lankan working people are facing an onslaught on their living standards, which has produced a wave of strikes and protests by workers demanding higher wages, improved conditions and pension rights. Last week, tens of thousands of workers defied the government’s ban on May Day events, participating in meetings and demonstrations.

Farmers across the country have held protests demanding subsidies for essential items, such as fertilisers and water, and for guaranteed prices for their crops. University students have held a series of protests against the privatisation of education and for improved facilities.

Sirisena’s claim that the government is achieving reconciliation—the ruling class term for doing away with ethnic discrimination—is bogus.

Protests by Tamils in the north of the island, whose social conditions were devastated by the ruling elite’s 26-year war against the separatist Liberation Tigers of Tamil Eelam, continue almost every week. Tamil demonstrators are demanding the return of all lands seized by the military, information about disappeared relatives, and an end to anti-democratic military rule.

At the same time, recent anti-Muslim violence and riots were provoked by extreme-right Sinhala-Buddhist groups that have been nurtured by the ruling coalition parties and by Rajapakse’s opposition.

Sirisena came to power as part of a US-orchestrated regime change operation to oust Rajapakse and bring the country into line with Washington’s military and diplomatic offensive against China. The campaign was backed by Wickremesinghe, former President Chandrika Kumaratunga and a host of pseudo-left groups, including the Nava Sama Samaja Party, the Frontline Socialist Party and the United Socialist Party, along with the Janatha Vimukthi Peramuna (JVP) and the Tamil National Alliance.

On taking power, Sirisena and Wickremesinghe changed the government’s foreign policy in favour of the US and its ally India, developing close military relations with both countries.

The ruling coalition introduced some cosmetic measures to increase wages and subsidies and then turned to the International Monetary Fund (IMF) for a bailout. The loan was tied to austerity demands for the halving of the country’s fiscal deficit to 3.5 percent of GDP by 2020. This is to be achieved by increasing taxes, cutting subsidies, and privatising education, health and other government-owned ventures.

Government claims to have restored democratic rights are false. The coalition, in fact, has invoked essential service orders and emergency laws to deploy the military and police to violently suppress protests by workers, farmers and students. Yesterday, for the second time in a week, the government mobilised police who used water cannons, tear gas and barricades to suppress protests by unemployed graduates in Colombo.

Sirisena also claimed in parliament that changes had been made to the hated and autocratic executive presidency, through the introduction of a 19th amendment to the constitution. While the amendment reduces some the president’s powers, Sirisena previously claimed that he would completely abolish the executive presidency.

Sirisena’s unity calls echo fears being voiced by other sections of the ruling elite. A comment in last weekend’s Sunday Times said the government faced a “dilemma.” It warned: “The biggest problems for the Sirisena-Wickremesinghe coalition are not the grandiose plans for development. Instead, it is the reality that a larger mass of the people will see their stomachs hurt more as living costs keep soaring.”

A recent press release from the Central Bank said there should not be any “financial slippage” by the government. It was crucial, the release stated, that “policymaking remains rational with a long term focus on greater public good, while minimising policy swings motivated by short term political gains.”

The Economist Intelligence Unit, a mouthpiece of international finance, also warned: “As the tensions within the coalition government remain high, there will be heightened instability in the political system” in the next period. It called for “stable” rule. The World Bank and rating agencies, such as Fitch, have also raised concerns that political instability in Sri Lanka will impact on Colombo’s austerity measures and its ability to attract foreign investment.

All factions of Sri Lanka’s ruling elite are calculating how to take on a developing movement of the working class against the government’s austerity measures. Sirisena and Wickremesinghe are attempting to patch up tensions in the coalition in order to unleash even greater attacks on the social and democratic rights of working people.

At the same time, Rajapakse and his group are building a right-wing movement, provoking anti-Tamil communalism and appealing to the Buddhist establishment and the military. The former president has demanded a snap election in order to establish a “stable government,” code for dictatorial measures directed against the working class.

The main political props of the ruling elite, including the trade unions and the pseudo-left, are desperately working to contain and dissipate every struggle by Sri Lankan workers and youth.