European Union refuses vaccine patent waiver but agrees mRNA transfer technology scheme as a sop to Africa

Jean Shaoul

The European Union (EU) has given its approval to the World Health Organization (WHO)’s scheme to enable six African countries, Egypt, Kenya, Nigeria, Senegal, South Africa and Tunisia, to access the technology needed to produce mRNA vaccines. Africa has thus far been almost entirely reliant on imported COVID-19 vaccines.

The decision comes after Pfizer/BioNTech and Moderna, whose mRNA COVID vaccines were funded by the German and US governments, had denied a request from the WHO to share their technology and expertise. Apart from Astra-Zeneca, the major pharmaceutical corporations have refused to let other countries produce their vaccines, instead signing a few deals to allow them to bottle and package doses, citing quality concerns and the time required to get new companies up to speed.

The EU, Switzerland and the United Kingdom have refused to agree to India and South Africa’s proposal, backed by more than 100 nations, researchers, campaign groups, businesses and media outlets, that the World Trade Organization (WTO) waive intellectual-property rights for COVID-19 vaccines and treatments during the pandemic. While the US Biden administration declared it was in favour of such a waiver, this was for public relations purposes only as it has done nothing to force US companies to comply.

Rejecting a coordinated global response to the pandemic, capitalist governments globally have put profits before lives in support of their own corporations and banks’ interests, condemning the world’s poorest countries to ever greater poverty and hardship.

More than a year after vaccines became available, just 12 percent of the African population, 168 million of a 1.3 billion population, have been fully vaccinated, with 80 percent of the population yet to receive a single shot. About six million people are being vaccinated in Africa every week. This needs to increase sixfold to around 36 million if the continent is to reach the target of vaccinating 70 percent of the population of every country by the middle of 2022. So far, only Mauritius and Seychelles have met the 70 percent target.

People line up to be vaccinated against COVID-19 in Lawley, south of Johannesburg, South Africa, Wednesday, Dec. 1, 2021. (AP Photo/ Shiraaz Mohamed)

The disparity in vaccine access is obscene. While 116 countries around the world are nowhere near meeting their 70 percent target and COVAX, the WHO initiative that provides most of the vaccines for low and middle-income countries, is running out of money, 75 percent of the population in the EU and the US have been vaccinated.

At last week’s fractious meeting of the African Union and the EU in Brussels, African leaders and public health officials accused rich countries of monopolising the vast majority of the global supply of vaccines by paying far more than poorer countries could ever afford, hoarding doses and donating vaccines close to their expiry date, making “a mockery of vaccine equity” Although several African countries have the know-how and facilities to manufacture vaccines, vaccine nationalism and profit gouging have left the continent 99 percent dependent on imports—to the extent that any doses are available for purchase—and donations.

The purpose of the WHO’s technology transfer project, launched last June in Cape Town, is to enable poorer countries to access the mRNA technology, which works by delivering genetic molecules containing the code for key parts of a pathogen into human cells, thereby provoking an immune response. This would supposedly enable their mass production of mRNA vaccines and end their reliance on Big Pharma’s profit-maximising schemes. More than 70 percent of mRNA shots from Moderna and Pfizer/BioNTech have gone to rich countries.

As WHO chief Tedros Adhanom Ghebreyesus said during the launch ceremony hosted by the European Council, France, South Africa and the WHO, “No other event like the COVID-19 pandemic has shown that reliance on a few companies to supply global public goods is limiting, and dangerous.”

Although the mRNA technology transfer hub has been set up to manufacture COVID-19 vaccines, it will have the potential to produce other vaccines and products, including insulin to treat diabetes, cancer medicines and, potentially, vaccines for diseases such as malaria, tuberculosis and HIV. Nevertheless, while training is set to begin next month, this is unlikely to have a major impact for quite some time.

The announcement comes days after Afrigen, a South African company that is part of the WHO’s mRNA hub, revealed it had developed, in collaboration with Johannesburg’s University of the Witwatersrand, its own version of an mRNA vaccine based on publicly available data for the Moderna vaccine. Their success exposes the self-serving claims of Pfizer, BioNTech and Moderna that Africa lacked the necessary expertise to manufacture their vaccines.

Afrigen plans to scale up production towards commercial scale and set up clinical trials later this year. It chose the Moderna vaccine because much of its sequencing is in the public domain—the cost of its research and clinical trials were largely financed by $2.5 billion of funding from the US government—and because the company has pledged not to enforce patents during the pandemic. Although, with most of the advanced countries declaring the pandemic over, that may not have much longevity.

South Africa’s President Cyril Ramaphosa called on the global vaccine distribution scheme COVAX and vaccines alliance Gavi to commit to buying vaccines from local manufacturing hubs.

The EU is anxious for its own geostrategic reasons to be seen to be supporting Africa’s vaccination programme at a time when its relations with Africa are strained.

France has announced it will pull its troops out of Mali in the face of huge popular opposition to French imperialism after Bamako’s military government hired Russian mercenaries and expelled the French ambassador. The military in Mali, Burkina Faso and Guinea have toppled French-aligned governments as ISIS-aligned and other jihadist groups have gained ground across the Sahel and central Africa.

Furthermore, African leaders view Europe’s green agenda as a means of blocking potentially lucrative oil and gas projects billed as bringing electricity to 600 million Africans.

The EU’s move comes at a time of growing competition for influence in Africa. Trade with China has risen over the last 20 years to reach $176 billion in 2020, while trade between the EU and Africa has stagnated at around €225 billion.

Last November, Chinese President Xi Jinping announced at the Forum on China-Africa Cooperation summit that Beijing would commit an additional 1 billion vaccines to Africa in 2022—more than the EU’s global vaccine-sharing commitment. China, he said, would also share 25 percent of its allocation of International Monetary Fund special drawing rights (SDRs) with Africa after Senegalese President Macky Sall made a request just days earlier. European leaders called last May for countries to redirect $100 billion in SDRs to Africa but have so far delivered little.

The EU signed off on the WHO’s technology transfer hub scheme as a cheap compromise at the EU-AU summit in Brussels, with the European Commission, Germany, France and Belgium agreeing to cough up a miserly €40 million for the technology hub to allow African countries to increase their manufacturing capacity and eventually produce mRNA jabs on a commercial scale.

The EU also pledged to continue donating vaccines to Africa—at a snail’s pace. Having thus far delivered just 148 million doses, 22 percent of the doses it pledged to vulnerable countries, the bloc intends to reach 450 million by the summer, still less than the 750 million pledged.

At the same time, BioNTech announced plans to deliver factory facilities built out of shipping containers to several African countries to enable the production of the Pfizer vaccine on the continent. While this may eventually make it easier for African countries to obtain the Pfizer vaccine, BioNTech will not be sharing its technological knowhow. The company has also signed a fill and finish deal—the final stages of production, with the drug itself coming from Europe—with Biovac. It has announced it will build manufacturing plants in Rwanda and Senegal.

Similarly, Moderna, under pressure to produce vaccines in lower-income countries, has announced plans to spend $500 million building mRNA vaccine factories in Africa, but few details are available.

French President Emmanuel Macron said that supporting African health sovereignty was one of the key goals of starting up local production, “to empower regions and countries to fend for themselves, during crises, and in peacetime.”

Be that as it may, there is no intention for that goal to be realized any time soon, as European Commission President Ursula von der Leyen admitted. “Today, of all the vaccines administered in Africa, one percent is produced in Africa—of all the vaccines. And rightly so, the goal is in 2040 to have reached a level of 60 percent of vaccines produced in Africa, that are administered in Africa [emphasis added].”

Omicron is proving to be deadly serious for children in the US

Benjamin Mateus

The American Academy of Pediatrics (AAP) reported that an additional 175,000 children were infected with SARS-CoV-2 for the week ending February 17. Despite the declines being celebrated by the media, this figure remains above even the peaks reached during Delta. Additionally, weekly childhood cases have exceeded 100,000 for 28 weeks in a row.

According to the AAP’s tracker, 871 children have died thus far in the pandemic, with 20 more children in the last week and more than 82 in one month. Since the Omicron surge commenced in early December, 220 children have died, accounting for one-quarter of all child deaths, making clear that Omicron is not mild for children or adults.

Child with COVID-19 in hospital bed (Medical University of South Carolina)

In all, more than 12.5 million children in the United States have tested positive for COVID-19, representing 20 percent of all children. Of these infections, 7.5 million (60 percent) have been added to the ledger since the first week of September 2021, coinciding with efforts by states and the Biden administration to open all schools to in-person instruction. During the Omicron surge, 4.6 million children were infected with COVID, and of these, 1.9 million were added in just the last four weeks.

This surge of infections underscores the indisputable fact that schools are and remain essential sites for pediatric infections and community transmission. Worrisome is that all efforts to permanently dispense with any meaningful mitigation measure during the current downswing in cases will fuel yet another surge, driven by the BA.2 sub-variant of Omicron, which is accelerating across the country.

This sub-variant currently accounts for almost four percent of all infections nationally. And recent evidence notes that it can spread more quickly than the BA.1 sub-variant. It also appears to evade immunity from prior infections and vaccinations better. Perhaps most concerning, it also seems more virulent, attacking the lungs more efficiently in animal models than BA.1.

These findings indicated that children, who remain the least vaccinated, will continue to be significantly affected by COVID. Adding to parents’ worries, Pfizer has postponed its rolling application to the Food and Drug Administration (FDA) to include the two-dose regimen for children aged six months to four years because it did not appear to generate a strong enough immune response.

The pharmaceutical giant has been saying that children may need three doses of the pediatric version of the vaccine (three micro-grams), which only has one-tenth of the dose of the adult vaccines. There are calls by parents and advocacy groups for off-label use, which the AAP has previously advised against, until the evidence for their recommendation can be assured.

The bad news on vaccines has been compounded by recent findings that an Omicron-specific booster does not confer an advantage over the conventional third dose of the vaccines. David Montefiori, director of the Laboratory for AIDS Vaccines Research and Development at Duke University Medical Center in North Carolina, who has been studying the COVID vaccines, told Nature, “What we’re seeing coming out of these preclinical studies in animal models is that a boost with a variant vaccine doesn’t really do any better than a boost with the current vaccines.”

More studies will be forthcoming but the current deadly stage of the pandemic has already exposed the extreme limitations of a vaccine-only strategy for a pathogen that has mutated to such an extent that it has developed immune evasion properties to escape any pharmacological offensives against it, including vaccines explicitly designed against it.

More pressing, however, in the context of the decision of governments at every level to surrender to the spread of the BA.2 sub-variant, is how children will fare.

According to the Centers for Disease Control and Prevention’s (CDC) tracker, 434 children under five, 288 children between five and 11, 316 children between 12 and 15, and 308 children between 16 and 18 have died during the pandemic. In total, there have been 1,346 COVID-related deaths, while only five have been reported killed from the flu in the same period. Worse, those under five account for almost one-third of all COVID deaths.

Figure 1 - Pediatric COVID deaths

In a recent Tweet, health care expert Gregory Travis published a graph showing that more than half of the childhood COVID-related deaths occurred since November, a span of four months. In the graph, the “orange” line demonstrates the sudden steep rise in deaths due to the deadly Delta and Omicron waves ignited by school reopenings. In this regard, the teachers’ unions bear a significant responsibility, having enforcing a return to in-person learning in the midst of a pandemic.

Travis bluntly stated, “we are currently in a wave of pediatric death, unlike anything we’ve seen so far in the pandemic. It is largely invisible because most people and the media only pay attention to the lagging indicators, which have not caught up with the wave of child deaths that began in November.”

The CDC’s data is far more comprehensive than the AAP’s, but the agency and the mainstream press hardly ever mention these findings. In particular, the CDC leadership has played a criminal role in suppressing the publication of vital data, to the population’s detriment.

Beyond the more immediate concerns from acute infections and deaths that have affected children, a far more sinister aspect of COVID relates to the impact these infections will have on their health over their lives. One of the oft-repeated but objectively unverified claims, that children are immune to COVID, is being proven wrong.

A recent study released in preprint form from the prestigious Friedrich Alexander University Erlangen-Nürnberg in Germany attempted to answer one such question. The authors wanted to determine “the frequency and extent of persistent sequelae in children and adolescents after infection with SARS-CoV-2” in their lungs. Previous studies in adults had shown that even three months after the acute phase of their infection, blood vessel injury to the lung’s microvasculature was evident in over 65 percent of patients.

Using low-field magnetic resonance imaging (MRI), which avoids the non-ionizing radiation from conventional computed tomographic imaging (CT), the authors compared children and adolescents with previously PCR-confirmed SARS-CoV-2 infection to controls. The two groups were well matched. Among those with previous COVID infection, 25 patients (46 percent) were diagnosed with Long COVID.

The comparative imaging demonstrated an increase in ventilation and perfusion defects in the lung tissue among those with prior infection. The study found that unaffected lung parenchyma was reduced from 81.2 percent in healthy volunteers to 60.8 percent in post-COVID patients.

The authors wrote, “In contrast to the consensus to date, assuming less severe COVID-19 infections and sequelae in younger patients, our study demonstrates widespread functional lung alterations are present in children and adolescents. This expands the understanding of pediatric post-acute COVID-19 disease, with the relevance of our findings even increasing as SARS-CoV-2 incidence is rising in most countries.”

The level of dysfunction the authors found was unexpected and underscores the dangers posed by public health leaders such as Dr. Anthony Fauci and figures like Bill Gates who have essentially called infection with the Omicron variant a “natural” vaccine because the disease is supposedly mild and could help the world reach herd immunity faster than the burdensome process of inoculating almost eight billion people across the globe three times if the booster is deemed essential to ensuring a person is “fully vaccinated.”

Indeed, the call to abandon all mitigation measures will have untold consequences for those fortunate to survive their repeated acute infections, regardless of their vaccination status.

Little is known about the impact COVID will have on the lives of billions of people, from immune dysregulation to opportune immune-related diseases, vascular and cardiac dysfunctions, chronic lung problems, kidney disorders and more.

However, the impact of the pandemic and mass infection on children is only now being ascertained. The results of these studies suggest that COVID infections may have life-long consequences for these innocents, underscoring the criminal nature of the “live with the virus” strategy being enforced by governments around the world.

COVID deaths and hospital admissions on the rise in Germany

Tamino Dreisam

While the federal and state governments claim there is a “break in the Omicron wave” and continue to ease protective measures, hospitalisations and deaths are on the rise in Germany. On Friday alone, more than 220,000 people became infected. The 7-day incidence rate remains huge, at 1,347 per 100,000 inhabitants. Some 329 out of 411 districts have an incidence rate of over 1,000; 52 districts have a rate of over 2,000 and the Regen district even has an incidence level of over 3,000.

The adjusted hospitalisation rate is around 12 (per 100,000), and has recently risen again. On Friday alone, 1,836 people had to be hospitalised and 243 were transferred to intensive care. The number of coronavirus patients receiving intensive care also rose again recently and now stands at 2,466. The proportion of vacant intensive care beds is at 10 percent, which is the national average and is considered the limit of hospital response capacity.

Data show a significant increase in physician visits for acute respiratory illnesses with a COVID-19 diagnosis in all age groups since the turn of the year. The values clearly exceed the level of the preceding waves. The number of active outbreaks in medical treatment facilities last week was 175, with at least 1,253 new infections.

Commuters at the public transport station Brandenburger Tor in central Berlin, Germany, Friday, Nov. 12, 2021. (AP Photo/Markus Schreiber)

A key driver of the pandemic remains schools and kindergartens. In both cases, the number of outbreaks has increased rapidly since the beginning of the year. In mid-January, there were even about twice as many kindergarten outbreaks reported per week as in the peak phases of the third and fourth waves. For the last four weeks, a total of 1,201 outbreaks have been reported so far. However, due to late reporting, the actual number is even higher.

At schools, the number of outbreaks is about six times higher than the same time a year ago. In the last four weeks, 2,013 outbreaks have been reported. Again, the actual number is even higher due to late reporting and the scaling back of PCR testing in schools.

The number of deaths is particularly alarming. Since last year’s federal election, more than 25,000 people have died from the virus. In particular, the death toll among children and young people is higher than ever before in the pandemic. Since last October alone, at least one child has died from COVID-19 every week on average. However, the actual number could be even higher, as the Robert Koch Institute does not provide an exact figure per week in this age group for reasons of data protection.

Despite these figures, Federal Health Minister Karl Lauterbach (Social Democratic Party, SPD) declared at a press conference on Friday that the peak of the Omicron wave had passed and that the pandemic had been weathered well: “So far, we have managed the Omicron wave and also the Delta wave reasonably well. We have managed to protect the large number of unvaccinated among the elderly and avert a significant increase in deaths. We have the opportunity to come into Spring with a good overall record.”

Statements like these underline the criminality of the ruling class. More than 120,000 coronavirus deaths in Germany alone are considered a “good overall record.” The claim that the elderly population has been protected is also an outright lie. Last week alone, there were 414 active outbreaks in old people’s and nursing homes—41 more than in the previous week. This resulted in 5,226 new infections.

The number of deaths in Germany is high. At the Federal Press Conference, Professor Michael Meyer-Hermann, head of the Department of Systems Immunology at the Helmholtz Centre for Infection Research, explained: “We have 1,400 deaths per million people, which is a frighteningly high number, I think. ... If you look at South Korea, it is only 140. So, you have countries that have managed better, and those are mostly the countries that have pursued a low-incidence strategy.”

The comparison with China is even clearer: the country with a population of 1.4 billion was able to limit the number of deaths to under 4,700 thanks to its Zero-Covid strategy. That would correspond to four deaths per million people.

At the press conference, Meyer-Hermann also addressed the great danger of long-term consequences of a coronavirus infection: “There are a large number of people who suffer long-term if they have a COVID infection and this is not only an economic problem, but also a psychological and mental problem in society. Just yesterday, there was a large-scale study in America showing that people who had a COVID infection have massively higher secondary consequences of a long-term nature. Periods of one year were examined.”

Despite the disastrous consequences of its coronavirus policy, the German government is not willing to change it, but on the contrary plans to perpetuate it for years to come. Thus, Lauterbach outlined a perspective for next autumn which could “in the best case,” assume that an Omicron variant will come again. “But it can also happen again that variants arise that penetrate deeper into the tissue than is the case with Omicron and then we would have a much more dangerous situation.”

The herd immunity policy now being implemented by almost every government in the world is not leading to an “endemic” or milder version of the virus. On the contrary, more infectious and vaccine-resistant mutations are forming. Just a few months after the emergence of the Omicron strain, the even more infectious Omicron sub-variant BA.2 is now spreading and is responsible for 15 percent of all infections in Germany.

The lifting of the last protective measures is meeting with widespread rejection. According to a recent poll by the Insa opinion research institute for Bild am Sonntag, a majority are in favour of keeping the mask requirement after 20 March. Even if it were to be abolished anyway, a majority still wanted to wear a mask for protection. Recent protests by schoolchildren against the spread of infections in schools have also met with widespread support.

COVID surge accelerates in New Zealand

Tom Peters

New Zealand’s COVID-19 surge continues, with case numbers rising sharply every day, placing immense pressure on the rundown healthcare system. Daily reported infections have nearly tripled in the past week, from 1,160 on February 16 to 3,297 today.

The total number of active cases in the community is at least 21,648. There are 179 people with COVID in hospital. Three deaths have been recorded so far this week, bringing the total for the pandemic to 56.

The Labour Party-led government repeatedly refers to the fact that deaths are among the lowest in the world. However, the government abandoned the elimination strategy which kept COVID out of the country for most of the past two years in October. Since then, businesses and schools have been reopened, allowing the Delta and Omicron variants to spread.

Waitakere Hospital (Google Streetview)

Prime Minister Jacinda Ardern told a press conference on Monday that “very soon we will all know people who have COVID, or we will potentially get it ourselves.” She declared that “most people” who get sick will only have a “mild-to-moderate illness.”

In fact, while governments are rolling back public health restrictions and pretending the pandemic is over, worldwide about 60,000-70,000 people are dying from the virus every week.

Epidemiologist Rod Jackson told Radio NZ today he is concerned people are not taking Omicron seriously enough. He said it was “just not true” to call it a mild disease, and pointed out that in the US “more people have died from Omicron than died from Delta”—a fact that has not been widely reported.

Vaccination, while essential, is not enough to prevent significant levels of illness and death. Some 49.6 percent of COVID patients in Auckland and Northland hospitals are described as fully vaccinated.

In just the last seven days, Ireland recorded 70 COVID deaths, Singapore 46, and Denmark 232. These countries have a relatively high level of vaccination and a population similar to New Zealand.

Hundreds of NZ schools are being hit with outbreaks, despite false assurances from the government that reopening schools, with children largely unvaccinated, was safe. Yesterday, the Ministry of Education reported that at least 447 schools and early childhood education centres were managing COVID cases, up from 163 a week earlier.

Otago University and Auckland University have chosen to move courses online for the first two months of the academic year. Canterbury University and Victoria University of Wellington, however, are pushing ahead with in-person lectures.

Public hospitals, which have been starved of funds for decades, are already under tremendous pressure. All the problems that existed before COVID, including chronic understaffing and overcrowded emergency departments, have been exacerbated.

Dianne McCulloch, a nurse from Waitakere Hospital’s emergency department and a New Zealand Nurses Organisation (NZNO) delegate, told Radio NZ last night, “We are on the brink of total exhaustion.” The situation is “worsening daily,” and “we are in fear that we are not going to cope,” she said.

Yesterday, Auckland Hospital and Greenlane Hospital announced that large numbers of non-urgent surgeries would be cancelled, in order to free up resources for COVID patients.

About 10,000 allied health workers have voted to strike for two days next month, over low pay and poor conditions. The Public Service Association (PSA) members include laboratory workers who process COVID tests, and contact tracers. Due to a lack of resources, some tests are taking five days to process.

All the unions, however, including the NZNO and PSA, have enforced the Labour government’s pro-business decision to abandon elimination. None of them have called for schools and non-essential businesses to close in order to stamp out COVID, which is the only way to prevent hospitals from being overwhelmed, and to save lives.

While the unions are seeking to prevent the emergence of a working class movement fighting for a scientific and properly-resourced elimination policy, the political establishment and the media are promoting extreme right wing proponents of mass infection.

For more than two weeks, the media has focused on several hundred anti-vaccination protesters occupying the lawn outside parliament in Wellington. The protesters, following the example of the Canadian “Freedom Convoy,” have blocked streets, forcing the closure of businesses, the National Library, university buildings, and Wellington Girls College. Several of the school’s students have reportedly been harassed by the protesters.

There have been violent confrontations with police. Human faeces was reportedly flung at the cops on Monday. Yesterday, three officers were injured after protesters sprayed them with what is thought to have been acid. Three people were arrested, including one who tried to drive a car into police officers.

The protest has spread beyond Wellington. About 1,000 people, led by Destiny Church’s front group, the Freedom and Rights Coalition, marched through Christchurch on Saturday, demanding the removal of vaccine mandates and an end to the inoculation of children. A smaller encampment has been established in Picton.

The rally promoters include anti-vax conspiracy theorists, far-right bloggers, the New Conservative Party, Destiny Church, and Counterspin, a NZ-based online media platform funded by US fascist Steve Bannon.

This rabble has received non-stop media coverage and encouragement from capitalist politicians, as well as some liberal and self-styled “left” commentators. A number of well-heeled celebrities have also voiced support, including Olympic sailor Russell Coutts, former All Black Keith Robinson, TV personality Gilda Kirkpatrick and musician Jason Kerrison.

Opposition National Party leader Christopher Luxon declared on Monday: “Kiwis should be able to sympathise with some of the issues being raised by protesters on parliament’s grounds without being framed as condoning illegal behaviour, or siding with anti-science conspiracy theorists.” He demanded that the government say when it will “start reducing the rules and restrictions” and “phasing out the mandates.”

National’s ally, the right-wing ACT Party leader David Seymour, has held discussions with protest representatives. Right-wing nationalist NZ First Party leader Winston Peters yesterday visited the encampment without wearing a mask. Peters was deputy prime minister from 2017 to 2020, when NZ First was a key partner in the previous Labour-led coalition government.

NZ First Party leader Winston Peters visits the anti-vaccine mandate protesters occupying parliament grounds, February 22, 2021. (Credit: Zeb Jackson Live Facebook page)

Peters told Newstalk ZB that the protesters were “very concerned” about “the state of democracy.” He denounced Ardern and other politicians for refusing to talk to the protesters, and said darkly that “because of that sort of arrogant behaviour, things are going to get a whole lot worse.”

The government is, in fact, moving to remove remaining restrictions, starting with the border quarantine system. From the end of February, New Zealanders returning from Australia will no longer have to isolate themselves in a quarantine hotel for 10 days. On Monday, Ardern told the media that COVID-19 cases were expected to peak in mid-to-late March, after which the government would start easing mandates and vaccine pass requirements.

Nervous market response to sanctions on Russia

Nick Beams

Global stock markets have fallen in the wake of the decision by Russia to order troops into the Eastern Ukrainian separatist republics of Donetsk and Lugansk after recognising their independence and the initiation of the first round of economic sanctions by the US and other major powers. Markets have not dropped sharply, at least, not yet.

In the US, following falls in Asia and, after an initial decline, flat markets in Europe, the major market indexes all recorded a decline of more than 1 percent. The S&P 500 index dropped by 1 percent taking it into correction territory—recording a 10 percent fall from its high on January 3. The Dow was down 1.4 percent and the NASDA dropped 1.2 percent, taking its decline for the year to 14 percent.

The US market has been showing increased volatility since the start of the year because of the surge in inflation, now running at more than 7 percent, which has prompted moves by the Fed to tighten its monetary policy, starting with an interest rate increase when it meets in the middle of next month.

Traders work on the New York Stock Exchange floor in New York CIty, January 25, 2022. (AP Photo/Ted Shaffrey)

But in a perverse way—an expression of the short-term time horizon on which financial speculation operates—the Ukraine crisis may have worked to soften the initial market fall. This is because it is seen to make a first interest-rate hike of 0.5 percentage points less likely due to the worsening geo-political situation. An interest rate rise of 0.25 percentage points has already been priced in as 100 percent certain.

Further market falls are expected in the next days and weeks with the Wall Street Journal reporting that investors are “scooping up at a record pace options contracts that would pay out if the recent declines in stock and bond markets worsen.”

The most immediate effect of the US-Russia conflict is the impact on energy prices. The price of oil is approaching $100 a barrel, a level it last reached in 2014, with predictions that it could go to $120 or even $150.

According to Mark Zandi, chief economist at Moody’s Analytics, the price of oil is probably up by $10 to $15 per barrel because of the conflict and, if the increases are sustained, this could add at least half a percentage point to the inflation rate.

“My sense is it really complicates the Fed’s efforts to rein inflation and get back to full employment,” he told the business channel CNBC.

The complications arise from the fact that in previous periods of geo-political turbulence, such as that which occurred in 2014 when Russia took back Crimea, inflation was low, the Fed acted as the backstop for the financial system through the provision of ultra-cheap money.

Now the Fed is moving to tighten monetary policy because of rising prices and is starting to remove some of the financial support it provided previously. But such has been the dependence of the financial markets on the flow of virtually free money that even a relatively small adjustment, as compared to what took place in the past, can have significant consequences. The fear is that it could set off major financial turbulence and a global recession.

“The Ukraine situation has become more tense when the markets are already in a potentially unstable condition because of rapid global inflation and rate-increase expectations in the US,” Takahide Kiuchi, executive economist at Nomura Research Institute, told the WSJ.

JPMorgan’s chief economist Bruce Kasman told CNBC that the rise in the oil price made things more complicated for the Fed and there was a scenario where “the growth hit starts to get more substantial.”

He said the fact that the Fed was tightening under conditions of rising oil prices magnified the “negative supply shock,” a situation which has not been seen since the days of Fed chair Paul Volcker in the 1980s.

It is a measure of the dependence of the financial markets on cheap money that Volcker lifted interest rates to as high as 20 percent in 1981, inducing the deepest recession to that point since the 1930s. Now his actions are being recalled under conditions where the rate rises being contemplated are only a tiny fraction of those carried out 40 years ago.

It remains to be seen how the effect of sanctions will play out and their impact on the global financial system and the world economy more broadly. But there are warnings of a major downturn.

According to a report in the WSJ, the UK National Institute for Economic and Social Research had made calculations based on a cut in Russian oil and gas exports, either because of sanctions imposed by the West or retaliation by Moscow.

It said major interruptions to supplies would lower global growth this year by just under 1 percentage point and would lead to a 1.7 percentage point cut in eurozone growth.

“The broad implications ... are somewhat reminiscent of the 1970s energy crisis,” it said. “Higher prices and supply limitations severely disrupted economic activity in the global economy and led to higher inflation.”

Even if oil and gas exports are not directly hit—Biden has said the measures will target Russia’s financial sector and President Vladimir Putin’s inner circle—they could still have an effect on major global firms.

According to a report in the Financial Times, “some of the world’s biggest oil companies and commodity traders are at risk of disruption to their business operations in Russia,” if the threat of imposing “unprecedented” sanctions is carried out.

Major oil companies, including BP, Shell and ExxonMobil, have deep ties with Russian oil companies and are involved in joint projects. Commodity traders, the FT report noted, such as Glencore, Vitol and Trafigura “all have important business relationships in the country.”

The possibility of a blowback from the imposition of sanctions was reflected in their announcement. Among the measures announced by Biden were sanctions on the raising of Russian foreign debt. Following Biden’s statement, there was a hasty clarification from the White House that they would only be applied to new debt and not on trading in the secondary market.

No doubt the experience of 1998 was recalled when the hedge fund Long Term Capital Management collapsed because of its heavy involvement in bets in the Russian financial monetary and financial system. Its demise threatened to spark a crisis in the US financial system and it had to be bailed out by the New York Federal Reserve.

Bipartisan congressional war consensus emerges, bringing together progressive “left” and Republican right

Eric London

On Tuesday, US President Joe Biden and leading NATO powers escalated the war provocations against Russia by announcing the imposition of substantial economic sanctions in response to Russian President Vladimir Putin’s recognition of the independence of Donetsk and Lugansk from Ukraine.

In the United States, a bipartisan consensus is emerging for even greater military and economic pressure to be brought to bear against Russia, increasing the risk of a war between nuclear-armed powers. This consensus has brought together a broad spectrum of the political establishment, from the Republican right to the so-called “progressive” wing of the Democratic Party.

This ruling class consensus is part of an attempt by the Biden administration to effect a new “national unity” aimed at securing American imperialism’s interests abroad, controlling the domestic political crisis and distracting from growing inflation and a daily US COVID-19 death toll of over 2,000 people.

US Senator Bernie Sanders speaks to reporters on December 15, 2021, in Washington. (AP Photo/Jacquelyn Martin)

Democrats and Republicans alike are expressing criticism that the Biden administration had been insufficiently ruthless in measures taken against Russia.

Ultra-right Republican Senator Ted Cruz (R-Texas) declared, “Biden-Harris officials are to an enormous extent directly responsible for this crisis. He and his administration instead settled for an endlessly deferred and wholly un-credible strategy of responding to Putin’s aggression after an invasion.”

A leading Trump supporter in the House, Representative Jim Banks (R-Indiana), said that he is “still hopeful that President Biden will show the backbone that’s been missing all along and we’ll hit Putin where it counts, by restoring the Trump sanctions on Nord Stream 2.”

Anti-Trump Republicans were less critical of Biden and equally enthusiastic about a belligerent policy towards Russia. MSNBC’s Andrea Mitchell welcomed former Trump national security advisor John Bolton on her program yesterday, providing him a chance to demand Biden take an even more aggressive stance toward Russia.

NBC wrote that Senator Lindsey Graham (R-South Carolina) has “been on the phone ‘all morning’ working with Democrats on an emergency supplemental funding package” aimed at expanding sanctions, as well as military aid for the Ukrainian government.

Biden faces substantial pressure from within the Democratic Party as well. Representative Jim Hines (D-Connecticut) stated that Biden was wrong for not immediately calling Russia’s actions in Donetsk and Lugansk an “invasion,” tweeting, “If you know the history of aggressive dictators, you know it’s critical not to lose clarity. Putin is invading Ukraine. Full stop. He’s done it before, and he will do it again if we don’t impose full sanctions.”

Senator Bob Menendez (D-New Jersey) similarly declared, “I think we can stop equivocating as to whether we have an invasion or not. I think the West, the United States has to make it very clear to Putin that the consequences begin now.”

Three of the Democrats who were part of the Munich delegation were former CIA, military and State Department officials, including Elissa Slotkin of Michigan, Jason Crow of Colorado and Tom Malinowski of New Jersey. Slotkin, a longtime CIA and National Security Council official, emphasized the broader geopolitical issues in the Ukraine confrontation, tweeting, “Make no mistake: this is about more than just Russia and Ukraine. China is watching our every move to see if the international community will stand up against Putin’s aggression. This is a moment to show that we won’t let them rewrite the next century.”

Democrats and Republicans are working together to force the Biden administration to launch more aggressive sanctions. In an article titled “Biden faces bipartisan calls for more punishing Russian sanctions,” NBC reported yesterday that “lawmakers across the political spectrum called on President Biden to impose crushing new sanctions,” including Biden’s “Democratic allies in Congress,” as well as the Republican minority.

In the House, Democrats and Republicans are introducing the SUPPORT Act to assess how American imperialism can provide weapons to a Ukrainian military. Representative Raja Krishnamoorthi (D-Illinois) said, “We need to get ready to assist our Ukrainian friends secure their sovereignty if the Russians invade, and second, we need to send a strong message to the Russians and others that the costs of invading Ukraine will be prohibitive.” The Ukrainian military includes neo-Nazi outfits like the Azov Battalion.

In the Senate, a similar bill introduced by Senator Menendez is sponsored by 80 percent of Senate Democrats, including self-described “progressives” like Chris Murphy of Connecticut and Jeff Merkley of Oregon.

A bipartisan delegation of Democratic and Republican Representatives returned from the Munich Security Conference this weekend and issued a joint statement calling for emergency legislation to further fund Ukraine’s military. The statement, signed by 21 senators and representatives, reads:

“It now appears increasingly likely that Russian forces will initiate hostilities against a free and peaceful Ukraine. We as a bipartisan delegation will bring home the same unity and resolve we have seen among our Atlantic allies against Russian aggression. We pledge to work toward whatever emergency supplemental legislation will best support our NATO allies and the people of Ukraine and support freedom and safety around the world. No matter what happens in the coming days, we must assure that the dictator Putin and his corrupt oligarchs pay a devastating price for their decisions.”

The delegation’s emphasis on the “unity” of the Republican and Democratic delegations underscores a fundamental purpose of the present drive to war. Racked by immense internal divisions that are exacerbated by the worsening coronavirus pandemic, spiraling inflation and the ongoing threat of fascist coup plotting at home, the American ruling class is attempting to use a foreign conflict to suppress social discontent at home.

As Representative Betty McCollum (D-Minnesota) said at a press conference held by the Munich congressional delegation: “We’re bicameral, we’re bipartisan, we’re united. NATO’s united, the EU’s united and we’re ready to do what it takes if Russia walks away.”

A particularly important role in the bipartisan warmongering is being played by the self-styled progressive Democrats.

Senator Bernie Sanders issued a belligerent statement yesterday in support of Biden’s sanctions against Russia, placing blame entirely on Russia for the present crisis and making no reference to the role of NATO and the United States:

“Vladimir Putin’s latest invasion of Ukraine is an indefensible violation of international law, regardless of whatever false pretext he offers. There has always been a diplomatic solution to this situation. Tragically, Putin appears intent on rejecting it. The United States must now work with our allies and the international community to impose serious sanctions on Putin and his oligarchs.”

Sanders himself voted to support the 1999 US war against Serbia, which was also “an indefensible violation of international law,” and the Clinton administration’s claims of genocide were also false. The same is true of the US invasion of Afghanistan, which Sanders also voted to support.

In the House, Democratic Socialists of America member Jamaal Bowman (D-New York) shared a tweet from former US Ambassador to Russia Michael McFaul comparing Putin to Hitler, denouncing Russia for “taking territory from smaller powers,” and calling for the US “to respond now. Right now.” Declaring his support for these threats, Bowman stated, “Absolutely devastating.” Alexandria Ocasio-Cortez (D-New York) has not issued a single tweet opposing Biden’s war provocations.

Ukraine’s President Zelensky calls for “war coalition in the parliament”

Clara Weiss

As the US and EU announced far-reaching sanctions on Russia on Tuesday, further escalating the conflict, Ukraine’s President Volodymyr Zelensky called for a “war coalition” in Ukraine’s parliament and began reviewing proposals to sever diplomatic ties with Russia.

On Monday, Russian President Vladimir Putin had recognized the separatist enclaves in Donetsk and Lugansk, which declared themselves “People’s Republics” in the wake of the US-backed 2014 coup in Kiev, as “independent” and ordered that Russian troops be sent into the area. The Russian parliament approved the deployment of Russian armed forces on Tuesday. Speaking at a press conference, however, Putin said his order did not mean that “the troops will go there right away.”

In response to questions from journalists about the 2015 Minsk Agreement, he insisted that Kiev had de facto sabotaged and ignored the agreement for many years, including by assassinating one of the signatories of the agreement, a separatist leader from Donetsk. He also insisted that, given its Soviet-era nuclear infrastructure, Ukraine could easily acquire nuclear weapons should it decide to do so. This weekend, Ukraine’s Zelensky threatened at the Munich Security Conference that unless the “territorial integrity” of his country be guaranteed, they would revoke the 1994 Budapest Agreement in which Ukraine gave up its nuclear arsenal, then the third largest in the world.

Secretary of State Antony Blinken, right, and Ukraine's Foreign Minister Dmytro Kuleba after a news conference at the State Department in Washington, Tuesday, February 22, 2022. (AP Photo/Carolyn Kaster)

Putin stressed again that any settlement of the conflict would require a significant demilitarization of Ukraine, as the missiles currently stationed there would enable NATO to hit targets deep in Russia’s territory.

On Tuesday, Moscow announced it would evacuate all its diplomats from Ukraine.

In Kiev, the move by Putin on Monday has been seized on by the oligarchy and the far right to further escalate the conflict and prepare the grounds for open war. Ukraine’s Foreign Ministry, which is headed by Dmitry Kubela, a participant in the right-wing protests that led up to the 2014 coup, submitted a formal proposal to Zelensky to sever diplomatic ties with Russia. Kubela who was on a visit to Washington, added that he had always felt that “this should have been done already back in 2014.”

Two parliamentary deputies, Oleksiyh Honcharenko from the “European Solidarity Party” of former President Petro Poroshenko, and Olga Savchuk, a deputy of the neo-Nazi Svoboda party, presented similar bills to the parliament. They will now be reviewed by parliamentary commissions, while Zelensky stated that he would consider the proposal by the Foreign Ministry.

The fascist deputy Savchuk also presented another proposal in parliament, calling for the closure of Ukraine’s borders with both Russia and Belarus and the proclamation of a state of war in Donetsk and Lugansk. Savchuk is a prominent member of the neo-Nazi Svoboda party, which openly glorifies the Nazi collaborator Stepan Bandera, as well as the Waffen SS Galicia Division.

The Svoboda party played an important role in the 2014 coup and then formed part of the government of Arseniy Yatsenyuk that emerged from it. The head of Svoboda’s parliamentary faction, Oleh Tyahnibok, recently stated that Russia had to be “dismembered” into “20 national states” in order for the Crimean peninsula to return to Ukraine—which is the stated aim of Ukraine’s official military strategy .

In yet another example of the intimate ties between Ukraine’s far right and the American state, Savchuk is an alumna of the US Congress’s Open World Leadership Center, which boasted in 2019 that she had been elected to Ukraine’s parliament.

Poroshenko’s European Solidarity party too has extensive ties to both the US and EU, as well as the far right in Ukraine. Poroshenko has repeatedly addressed far-right rallies directed against Zelensky and any negotiated settlement of the conflict in East Ukraine.

The former Ukrainian president, whose net worth is around $1.5 billion, recently returned to Ukraine where he was able to avoid arrest in a treason case thanks to the direct intervention of the US and Canada. He has since conducted a campaign attacking the Zelensky government from the right and accusing it of being insufficiently “decisive” in the conflict with Russia. Over the past weeks, Zelensky has repeatedly rejected claims by the Biden administration that a Russian invasion was “imminent” and denounced the US war propaganda as “hysteria.”

In a hint that powerful factions of the American state and intelligence agencies are now moving against Zelensky, the campaign against him has now been taken to the pages of the New York Times. On Monday, the outlet, which functions as little more than a press agency for the CIA during war crises, published a comment by Ukrainian journalist Olga Rudenko on Monday under the title “Ukraine’s President is in over his head.” Rudenko, who recently completed a fellowship at the University of Chicago’s Booth School of Business, a hub for the US business and political elite, wrote that “Mr. Zelensky’s behavior” was “odd to the point of erratic.”

She then acknowledged that Zelensky, should he make any “concessions to Russia particularly over the conflict in eastern Ukraine,” would face “hundreds of thousands of people” on the streets and suffer the same fate as Yanukovich who was overthrown in 2014. What Rudenko, of course, did not say, is that the alleged “revolution” of 2014 was carried out by fascist thugs that were then funded and have since been further armed and built up by the American state.

Zelensky’s response to the pressure from the far right and Washington has been to call for a “war coalition” with these neo-fascist forces and to step up war preparations. On Tuesday evening, he held a closed meeting with all parliamentary factions. At the meeting with Poroshenko’s European Solidarity faction, Poroshenko reportedly presented proposals for a significant buildup of the military capabilities of Kiev and troop deployments to the north and northeast of the country.

After these meetings, Zelensky made an address to the nation. In a statement that was clearly addressed first and foremost at his critics among the oligarchs and neo-fascist bands, he said, “All Ukrainian politicians must now be state actors, and leave their ambitions aside, for the sake of our state. Everyone understands that we now need a war coalition in the parliament, unity, and quick and important decisions for the economic stability and military defense capability of our state. Today, all politicians and parties have just one color: Blue-yellow [the colors of the Ukrainian national flag].”

Making clear that his government was preparing for war against Russia, Zelensky insisted in the address that Russia had “unilaterally” reneged on the Minsk Agreements and stated, “We will not give anyone anything [of our territory]. We are people not of 2014 but of 2022. We are a different people now, we have a different army.” Indeed, the imperialist powers have pumped billions into Ukraine’s military since 2014. Since 2020, Ukraine is also an “Enhanced Opportunities Partner” of NATO, which involves “enhanced access to interoperability programs and exercises, and more sharing of information.”

Zelensky told the Ukrainian people that they must all now be prepared for “hard labor” every day in order to safeguard the country and concluded his speech with the nationalist “Slava Ukraini” greeting, which, while now common place in Ukrainian politics, is closely associated with the fascist politics of the Organization of Ukrainian Nationalists and the Ukrainian Insurgent Army in the 1930s and 1940s.

That evening, Zelensky also signed a decree calling for the mobilization of all military reservists but said there was no need yet for a general mobilization. He will be meeting with representatives of Ukraine’s business elite to discuss large-scale investments into the further buildup of Ukraine’s armed forces.

The military conflict in East Ukraine meanwhile continued to escalate. In Donetsk, a blast on a highway killed three civilians on Tuesday, according to separatist authorities. Another major blast occurred in the city center Wednesday night with no casualties reported. The separatist authorities described the blast which occurred at the city’s television center as a “terror attack.” In Lugansk, two civilians were reportedly killed when a Ukrainian shell hit a car.

According to Russian news reports, over 100,000 refugees from East Ukraine have now arrived in Russia; 30,000 of them are children.