Push for European Central Bank to tighten monetary policy

Nick Beams

Pressure is building on the European Central Bank to end its easy money policy and align itself with other major central banks by starting to lift interest rates as its governing council meets in Frankfurt today.

James Bullard, president of the St Louis branch of the US Federal Reserve and a voting member of its policy-making body, told Financial Times (FT) this week it was “fantasy” to think the US central bank could bring down inflation without raising interest rates to a point where they constrain the economy.

Christine Lagarde, president of the ECB, speaking at the European Parliament earlier this year (Credit: AP Photo/Jean-François Badias)

In another indication of central bank policies, the Reserve Bank of New Zealand yesterday lifted its base rate by 0.4 percentage points, the biggest single hike in 22 years.

The aim of this global agenda is not to bring down prices—no hike in interest rates will do that. Rather it is to impose recessionary conditions aimed at preventing workers from pushing for wage increases to compensate for falling living standards as prices race out of control.

The ECB has justified its easy money policy, which has made billions of euros available to finance capital, on the grounds that it has been necessary to try to lift the inflation rate to 2 percent. But this level has been well and truly surpassed, with no end to the price rises in sight.

In the euro zone, the annual rate of inflation rose to 7.5 percent in March, up from an annual rate of 5.9 percent the previous month. The ECB acknowledged at its previous meeting that “inflation was becoming more broad-based and more persistent.” Initially, in line with pronouncements by the US Federal Reserve, the ECB insisted inflation was “transitory.”

Speaking to the FT on the eve of today’s ECB meeting, Otmar Issing, its first chief economist when it was created in 1998, denounced the “misguided” response of the central bank to inflation.

Speaking for the more “hawkish” sections of financial policymakers in the northern European countries, in particular Germany and The Netherlands, Issing said the ECB had made a “misdiagnosis” of inflation and indicated that easy money policies were a significant factor.

“The ECB has contributed massively to this trap in which it is now caught because we are heading towards the risk of a stagflationary environment,” he said.

The ECB was too slow in raising interest rates. “Inflation was the sleeping dragon; this dragon has now awoken.”

He told the FT that ECB policy makers were relying on a forecasting model that no longer applied. This was because the pandemic and the disruption resulting from the war in Ukraine would keep inflation higher by reversing globalisation amid rising trade tensions.

Issing said the ECB had “lived in a fantasy” of continuing its easy money policy “without any negative consequences.” Now it was faced with a “stagflationary” situation of rising prices and slowing growth.

The FT also cited Christian Swing, the chief executive of Deutsche Bank, who said soaring inflation was “poison for the stability of our economy and society” and it was “urgent” the ECB act.

The push for higher wages is being fueled by real pay cuts. In the last three months of 2021 hourly wages in the euro zone were 1.5 percent higher than a year before, but the average rate of inflation was 4.7 percent. Since then, the gap has widened significantly, with inflation being driven by the sharp rise in energy costs.

Euro zone energy prices rose by 12.5 percent in March alone, and in February were 44 percent higher than a year before. The fear of all central bankers is that this becomes the driving force for a wages movement across the continent. Earlier this month, Greek workers held a national strike against rising prices and called for an increase in the minimum wage.

Inflation will continue to surge in the coming days and weeks. In the US, the headline rate of inflation for March was 8.5 percent, up from 7.9 percent in February. Seeking to turn inflation into US war propaganda, White House press secretary Jen Psaki said on Monday evening the inflation number would be “extraordinarily elevated due to Putin’s price hike.”

However, the inflation surge began well before the Russian invasion of the Ukraine, provoked by the refusal of the US and NATO to even consider, let alone negotiate on, Moscow’s calls for security guarantees and that Ukraine not become a member of NATO.

In a report on what it called “chaotic trading” in basic commodities such as oil, gas, metals and food, a Wall Street Journal article on Tuesday noted that the rise in commodity prices was “more intense that anything seen in the modern trading era.”

It made clear that while the price hikes have been accelerated by the Ukraine war, the inflationary surge began much earlier.

One of the first signs of the surge was in the timber market as futures contracts moved up so sharply that traders were unable to complete their deals.

“Other, larger commodity markets heated up in 2021 and began their own bouts of chaotic trading,” the article noted.

It cited comments by Tracey Allen, commodities strategist at JPMorgan Chase, who noted: “Inventories across energy, agricultural and metals are critically low everywhere” and it “doesn’t appear there’s silver bullet.”

One of the chief reasons for the crisis was the refusal of capitalist governments, particularly the US, to take any meaningful public health safety measures to deal with the pandemic. They increasingly pursued the murderous “let it rip” program, lest necessary public health measures adversely impacted on the stock market in the wake of the market crash in March 2020 at the start the pandemic.

This inaction, as the Fed supported finance capital by pouring an additional $5 trillion into the financial system, hit the real economy, leading to supply chain constrictions due to the rapid spread of COVID-19 infections around the world.

Having created an inflation crisis by their refusal to deal with COVID, the ruling classes and their central bankers are now determined to make the working class around the world pay by lifting interest rates to create recessionary tendencies aimed at suppressing wage demands.

With inflation reaching new highs in the US, the Fed is almost certain to hike its base rate by 0.5 percentage points at its next meeting in May with further rises to follow. This will lay the basis for similar action by other central banks, including the ECB.

More severe measures could follow. Fed chair Jerome Powell and the nominee for the position of vice chair, the previously “dovish” Lael Brain, have both expressed their admiration for former Fed chair Paul Volcker. They have indicated that they are prepared to follow the road Volcker took in the 1980s when major interest hikes were used to create a deep recession to crush a movement of workers for higher wages.

The Three-Way Split of French Politics

Mathias Bernard

With the majority of the ballots counted on Monday morning, the official results of the first round of the French presidential election appear to confirm the power dynamics at work from the previous election.

Emmanuel Macron (La République en Marche, LREM) and Marine Le Pen (Rassemblement National, RN) have made it into the second round – in the same order as five years ago, making it the second time the duel will take place. The last and only time this happened in France was when Valéry Giscard d’Estaing (RPR) twice faced off against François Mitterrand (Socialist Party), first in 1974, when the right-wing candidate won and then again in 1981, when the socialist candidate triumphed.

Such stability is largely linked to the main candidates’ clout. Already in the game five years ago, Macron and Le Pen have been able to retain a loyal electoral base. Over the past weeks new voters have rallied around them, prioritising a so-called strategic vote (“vote utile”) over partisan considerations.

Strategic voting

Compared to 2017, Macron is up by nearly 4%. The rise is all the more notable given the incumbent president has abandoned the middle-ground stance between right and left that had ensured his initial success and adopted an agenda that clearly places him on the centre-right of the political spectrum.

The move alienated a fraction of his voters from the left, but attracted a larger part of the voters from the centre and the right – a testament of which is the very low score (4,7%) of Valérie Pécresse, candidate of Les Républicains (LR).

Le Pen has risen nearly as much, with a score never before achieved by the Front National (FN) and then RN within the context of a presidential election. She too benefited from calls to vote strategically and was thus able to largely outperform Éric Zemmour (Reconquête), the former Figaro journalist and far-right candidate. Having initially undermined her leadership, in the end Zemmour helped complete Le Pen’s decade-long effort to “normalise” her candidacy. By claiming the niche of the identity-based right, Zemmour enabled Le Pen to stress the bread-and-butter issues that appealed to the working classes.

On the left of the political spectrum, Jean-Luc Mélenchon of La France Insoumise (LFI) obtained his best score in his third presidential election, also benefiting from the in extremis support of an electorate of the moderate left concerned above all to avoid a second round opposing Emmanuel Macron to Marine Le Pen. Mélenchon came within less than 1.5 points of Le Pen’s score, yet wasn’t able to stop her and make it to the second round himself.

A French political field split into three

The momentum of the strategic vote, which picked up barely a month before the first round, appears to confirm the restructuring of the French political field around three major poles dating back to the 2017 election.

+ A liberal, centrist and European pole attracting, at every national election, a little more than a quarter of the voters but which, thanks to the mechanics of the majority vote, manages to dominate political life until now.

+ A populist and identity-based pole, today dominated by Le Pen and represented by two candidates whose cumulative score (over 30%) constitutes an all-time record for the extreme right and populist identity in a national election in France: it is therefore this pole that has recorded the strongest surge over the last five years.

+ A radical left-wing pole, dominated by the La France Insoumise. If we include the results of the communist and Trotskyist candidates, this totals just under 25% of the vote.

Such a three-way split results in the marginalisation of the two political parties that have structured French political life since the 1970s, the centre-right Les Republicains (formerly the UMP) and the centre-left Socialist Party.

The decline of the traditional parties: an air of déjà vu

With less than 2% of the vote, the Socialist Party sees a decline that could merely be circumstantial. Such a turn of events is not without reminding of the fate of the Radical Party at the beginning of the Fifth Republic: having dominated the left at the time, the party had fallen victim to the bipolarisation of the political landscape set in motion by President Charles de Gaulle and had survived only thanks to a large network of elected representatives, mainly present (like that of the Socialist Party today) in the southwest of France.

The decline of the traditional right is another significant fact of this election, with LR candidate Valérie Pécresse gaining just a quarter of the score achieved by her party five years earlier. The result appears as yet another blow to Les Républicains (LR), who recorded their lowest vote share in the 2019 European elections at 8.4%, in contrast to 20.1% in 2014. It also goes to show the narrowness of the political space now occupied by this party, wedged between Macron’s centre-right and Marine Le Pen’s populist far right.

Important developments since 2017

It’s important to not interpret the results of this first round as a repeat of the 2017 election. The apparent stability of the balance of power masks important changes. The political landscape continues to shift rightward. Testament to this is the emergence of Éric Zemmour’s identity-based platform and Emmanuel Macron’s renewed political offer. While Jean-Luc Mélenchon made gains, they were not enough to compensate for the Socialist Party’s precipitous decline.

Populism also continues to grow. In five years and under the effect of a certain number of social movements (the Yellow Jackets in particular), its rhetoric has become more radical. More than ever, the split between the people and the elite shows itself at the ballot box. This populist rise weakens Emmanuel Macron, whose position is less favourable than it may appear at first glance.

The incumbent president obtains scores comparable to some of his predecessors who were not re-elected for a second term: Giscard d’Estaing in 1981 (28% of the vote), Nicolas Sarkozy in 2012 (27% of the vote). Moreover, he cannot capitalise on the desire for change that largely explained his victory five years ago. The campaign between the two rounds will thus bring into play two antagonistic projects, two visions of society, but also a tension between the “dégagisme” (i.e., a political ideology based on the French verb dégager, “to oust”, calling for the rejection of the established political class) hostile to the outgoing president, and calls by most first round candidates for a collective front against the extreme right.

EU and Germany supply heavy weaponry to Kiev to “force a defeat of Russia”

Johannes Stern

The European Union is massively expanding its arms supplies to Ukraine. This was decided by the EU foreign ministers at a meeting in Luxembourg on Monday. In concrete terms, it was agreed that the joint military aid would be increased by €500 million to €1.5 billion, said EU High Representative for Foreign Affairs Josep Borrell after the meeting.

The EU powers left no doubt as to what their goal is: They want to inflict a military defeat on Russia in Ukraine. “Put the emphasis on weapons deliveries,” Borrell explained after he travelled to Kiev with EU Commission President Ursula von der Leyen last weekend. Sanctions were “important,” but would “not solve the problem of the Battle of Donbas.” Let it be clearly stated, Borrell said, “The war will be decided in the battle for Donbas.”

Annalena Baerbock in Luxemburg on April 11, 2022. (AP Photo/Olivier Matthys)

Ukrainian Foreign Minister Dmytro Kuleba spoke at last week’s NATO summit in Brussels of the looming massive confrontation. “The Battle of Donbas will remind you of the Second World War with its large-scale operations and manoeuvres, the use of thousands of tanks, armoured vehicles, aircraft and artillery,” he said.

This is exactly what the EU and NATO powers are preparing for with the delivery of arms to the Ukrainian army. It is none other than German imperialism, which waged a war of annihilation against the Soviet Union during the Second World War, that is increasingly taking the lead. After initially hesitating, the German government is now advocating the delivery of heavy weaponry to defeat Russia in Donbas.

“What is clear is that Ukraine needs more military equipment, especially heavy weaponry,” said Green Foreign Minister Annalena Baerbock on the sidelines of the EU Foreign Ministers’ Meeting. “Now is not the time for excuses, but the time for creativity and pragmatism. And it is precisely with a view to issues such as replacement materials and training that it is important to support Ukraine together as quickly as possible.”

Germany has already massively supplied weapons to Ukraine, including thousands of anti-tank and anti-aircraft missiles. The weapons also go to far-right forces within the Ukrainian armed forces and the so-called territorial defence of the country. The planned delivery of tanks and other heavy weaponry will intensify the war and create a military conflict with the nuclear-armed power Russia.

According to a report by the daily Handelsblatt, the German arms giant Rheinmetall is preparing to supply tanks to Kiev. According to Group CEO Armin Papperger, this includes the “Leopard 1” battle tank, the predecessor model of the “Leopard 2” currently used by the German army. “The first Leopard 1 could be delivered in six weeks,” stated Papperger. In total, Rheinmetall could hand over up to 50 tanks of this type to Ukraine.

Also under discussion is a delivery of the “Marder” armoured personnel carrier. Here, too, “Rheinmetall has declared its willingness to deliver 50 to 60 decommissioned Marder armoured personnel carriers to Ukraine,” wrote Handelsblatt. According to Papperger, the first 10 to 20 could be ready within six weeks.

An aggressive campaign is underway in the political establishment and the media to deliver the heavy equipment as quickly as possible. “Germany must now act quickly,” urged Reinhard Veser in the Frankfurter Allgemeine Zeitung. “To force a defeat of Russia in this war requires the combination of economic pressure on Russia and military support for Ukraine.”

In a detailed article, Der Spiegel praised the merits of German tanks in the war against Russia. “In Ukraine, the Marder could play an important role” and “help the armed forces of Ukraine in the fight against the Russian invaders.” The Marders would roll into battle “alongside main battle tanks” and secure them “together with other military vehicles.” They would “bring groups of tank grenadiers forward into battle” and “in the offensive” they would try to “take out enemy tanks with attacks.”

The activities and statements of leading government politicians indicate that arms deliveries are being prepared in a timely manner. “If the Ukrainians want the tank [Leopard 1], and they have signaled this to me, then we should find a way to make it happen,” said Marcus Faber, defence policy spokesman for the Free Democratic Party (FDP) parliamentary group in the German parliament.

Germany made “an undertaking” by deciding to support Ukraine with arms. As a result of this obligation to continue to support the country, Federal Minister of Economics Robert Habeck stated, “Weapons must be delivered quickly, because the attack of the Russian troops on the east of Ukraine will soon be imminent.”

Significantly, the chairpersons of the Committees on Foreign Affairs, Defence and Europe—Michael Roth (Social Democrats, SPD), Marie-Agnes Strack-Zimmermann (FDP) and Anton Hofreiter (Greens)—travelled to Ukraine yesterday for talks. The three politicians from the “traffic light” coalition partners are vehement advocates of “heavy” arms deliveries and can hardly control their demands for war against Russia.

In addition to the Marder, Hofreiter also pleaded for the supply of “heavy sniper rifles such as the G-82” before his departure. This had a “12.7-millimetre projectile” and could “break the armoured vehicles of the Russian National Guard.” Strack-Zimmermann informed the Ukrainian ambassador and notorious Russian hater Andrij Melnyk in Der Spiegel ’s “Spitzengespräch” discussion format: “If you send tanks, you have to want to win. ... Their soldiers must master this, otherwise they would really be cannon fodder for ‘the Russians.’”

In a joint statement on Tuesday, Hofreiter, Strack-Zimmermann and Roth once again spoke out in favour of further arms deliveries and a halt to imports of Russian oil as quickly as possible and a clear EU perspective for Ukraine. “There are likely to be broad majorities in the federal parliament for this. Germany must take on even more responsibility,” they demand in the document, according to the German Press Agency (DPA).

At the same time, the three deputies criticised the refusal to invite Federal President Frank-Walter Steinmeier (SPD), who had planned a visit to Kiev together with the president of Poland and the three Baltic states. Although Steinmeier played a central role as German foreign minister in the right-wing coup in Kiev in 2014, he also maintained diplomatic relations with Russia, for which he was criticized despite public apologies.

On Tuesday evening, the Ukrainian ambassador to Berlin announced that Chancellor Olaf Scholz had been invited to Kiev. “We also communicated this in such a way that my president and the government would be very happy about it,” said Melnyk on German television. The visit was supposed to be about how Germany can support the Ukrainian army with “heavy weapons” in the fight against Russia.

Scholz also called for further arms deliveries on Monday. “In the past, we have armed Ukraine with weapons and equipped it with anti-tank missiles, anti-aircraft missiles and ammunition, and many other things. And we will continue to support Ukraine,” Scholz stressed. This is done “in close cooperation” and in consultation “with all our friends.” There will be “no going it alone, but always joint and carefully considered action.”

This amounts to a warning. Currently, NATO and the EU are “acting together” to flood Ukraine with weapons and to use Putin’s reactionary invasion as a pretext for widespread war against Russia itself. The danger of a third world war waged with nuclear weapons is thus increasing immensely.

The planned arms deliveries are done “out of good ethical intent,” but are potentially a “path to the third world war,” warned the military-political adviser of former chancellor Angela Merkel, former brigadier general Erich Vad, in comments to the DPA. In doing so, he indirectly admitted that the imperialist powers are the main warmongers. “We had exactly the same acceptance of thousands of dead civilians in Iraq, in Libya, in Afghanistan,” he said. So far, the so-called collateral damage in Ukraine has in fact been much lower than in Iraq or Afghanistan.

New Zealand challenges Solomon Islands’ sovereignty over agreement with China

John Braddock

In the wake of the recently revealed Solomon Islands’ security deal with China, New Zealand Foreign Minister Nanaia Mahuta has declared that Pacific leaders will want “greater clarity” from Honiara. She is pushing to bring forward the June meeting of the Pacific Islands Forum (PIF) to intensify pressure on Prime Minister Manasseh Sogavare.

The “security cooperation” agreement between the Solomon Islands and China, reportedly close to being signed, will potentially give the Chinese military scope to operate within the Pacific Island state.

The draft agreement leaked online on March 25 met with an uproar in Canberra, Wellington and Washington. Mahuta said the pact will “destabilise the current institutions and arrangements that have long underpinned the Pacific region’s security.” Australia’s Defence Minister Peter Dutton accused China of using “incredibly aggressive” tactics to expand its presence in the region.

Sogavare denounced the backlash as “very insulting.” He accused Canberra and Wellington of treating the region as their “backyard.” He pointed to “discussions in the Australian public media encouraging the invasion of Solomon Islands to force a regime change” to stop the deal. He denied there were plans to allow China to establish a military base in the Solomons.

Solomon Islands Prime Minister Manasseh Sogavare (Photo: solomons.gov.sb)

Dutton flatly rejected the assurance, also given by China, saying: “I don’t think it’s sincere, and I think it’s propaganda that should be called out.” A spokesperson for China’s foreign ministry stated that countries in the region should “respect Solomon Islands’ sovereignty and its independent decisions.”

After meeting with Fiji’s Prime Minister Frank Bainimarama late last month, Mahuta declared the 18-member PIF would need to examine the impact of the agreement on the region. While formally noting that the Solomons can “exercise their sovereignty,” she suggested that could be over-ridden by concerns about the “reverberative impact across the Pacific and regional security interests.”

These statements, implicitly questioning the Solomons’ right to determine its own foreign and defence arrangements, highlight the neo-colonial character of New Zealand’s relations with Pacific countries.

The Labour Party-led government usually tries to mask New Zealand’s predatory interests with a veneer of cultural sensitivity and humanitarian concern. Last November Mahuta told an Institute of International Affairs audience that her new “Pacific Resilience” policy was not anti-Chinese, but “to do with people-to-people relationships and reengaging with the culture of Aotearoa [New Zealand] and the Pacific.”

Australia and New Zealand, along with Washington, are determined to shut China out of the South Pacific. Any local government that fails to accede is soon targeted. In 2018, the Australian media launched a hysterical campaign based on false reports that Vanuatu was about to allow China a permanent naval facility. In 2021 further unfounded allegations about a Chinese military base in Kiribati generated dire predictions about changes to the balance of power in the Pacific. China had offered to help rebuild an airstrip on isolated Kanton Island for civilian use.

The New Zealand government is in lockstep with its Australian counterpart over the Solomon Islands—as it is aligned with the US and NATO in the war with Russia over Ukraine. Amid the eruption of geo-political tensions unleashed by the Biden administration’s targeting both Russia and China, every country is being forced into line.

In a sign that Washington is preparing to intervene directly and aggressively, the Financial Times reported last week that Kurt Campbell, the US National Security Council Co-ordinator for the Indo-Pacific, along with top State Department official Daniel Kritenbrink, will visit the archipelago this month.

The outcry over the Solomon Islands is being exploited to intensify the military and diplomatic offensive against China’s presence in the Pacific. Recriminations have been mounting that the local imperialist powers have taken their eye off the ball over their influence in the region.

In New Zealand, former foreign minister Winston Peters accused Labour of neglect, telling Radio NZ on March 28, “we needed to intensify our interests” in the Pacific. Peters, leader of the right-wing populist NZ First Party, played a major role in the 2017-2020 Labour-led coalition government. He launched the country’s “Pacific Reset” policy in 2018, aimed at pushing back against Beijing’s influence, and repeatedly called for the US to boost its military presence in the region.

Former Australian Labor Prime Minister Kevin Rudd has appeared in the NZ media saying the threat China poses in the Pacific is “real,” and NZ “must act.” Rudd told TVNZ on April 3 that the Solomon's deal was a “disturbing development.” He claimed Beijing had a direct interest in establishing the ability to “interdict” the lines of communication between Australia and the US in the event of a crisis, while protecting its economic interests around fisheries.

Rudd emphasised that Canberra and Wellington should deal with Beijing together, rather than being “picked off individually.” In an interview with the Listener, he urged New Zealand and Australia to pool military resources and establish “comprehensive, expansive joint maritime and aerial surveillance of the South-West Pacific.”

The Australian government has just announced a major multi-billion dollar upgrade to defence spending, including advanced hypersonic missiles capable of attacking China. New Zealand’s opposition National and ACT Parties reciprocated, calling for military spending to be raised to 2 percent of GDP, an increase of 0.5 percentage points or about $NZ1.7 billion.

Prime Minister Jacinda Ardern pointed out in parliament that such an increase would lead to cuts in public services. In fact, last year’s budget provided a massive boost to the Defence Force. An extra $NZ676.5 million was allocated for “readiness and frontline capability,” alongside $898 million towards replacing the ageing Hercules planes with new aircraft designed to provide “interoperability” with US forces.

The rapidly escalating diplomatic and military tensions across the Pacific, highlighted by the Solomon Islands estrangement, intersects with the war drive in Europe. On Friday, in a speech following high-level meetings among NATO Foreign Ministers, NATO Secretary-General Jens Stoltenberg said the alliance had “agreed to step up cooperation with our partners in the Asia-Pacific.” The statement followed intense lobbying by Canberra.

While New Zealand is not a member of NATO, it is one of a few countries referred to as “partners across the globe” that contribute to NATO-led defence operations. Mahuta attended the NATO meeting online. Stoltenberg hypocritically declared: “We have seen that China is unwilling to condemn Russia’s aggression. And Beijing has joined Moscow in questioning the right of nations to choose their own path. This is a serious challenge to us all.” NATO will provide Australia, Japan, New Zealand and South Korea with “practical and political cooperation” in the areas of cyber, new technology, and “countering disinformation.”

Pakistan’s new prime minister promises “paradise” for investors, as mass anger over price hikes, joblessness grows

Keith Jones

Pakistan’s National Assembly elected Shehbaz Sharif, the president of the Pakistan Muslim League (Nawaz), as the country’s prime minster Monday, one day after ousting Imran Khan and his Pakistan Tehreek-e-Insaf (PTI—Pakistan Justice Party) led government in a highly contentious non-confidence vote.

The government’s parliamentary defeat was prepared over several weeks by the defection of PTI coalition partners, principally the Karachi-based MQM-P, and several PTI MPs. However, the most important “non-confidence vote” was that cast behind the scenes by the Pakistani military, far and away the country’s most powerful state actor. As the political maneuvering became more intense in recent weeks, the military top brass made clear that it had soured on Khan, whose election it had helped orchestrate in 2018, and would no longer backstop his government.

Shehbaz Sharif is a right-wing businessman, who has thrice been the chief minister of Punjab, Pakistan’s most populous state. He is the younger brother of Nawaz Sharif, the three-time prime minister, erstwhile political protégé of the late US-backed dictator General Zia-ul Haq, and founder of the Pakistan Muslim League (Nawaz) or PML-N. In 2017, the Supreme Court ordered Nawaz Sharif to step down as prime minister due to Panama Papers-related corruption revelations, and the following year he was sentenced to a 10-year jail term and barred from holding public office for life.

Pakistan’s change of government has been precipitated by a devastating socioeconomic crisis that has raised the specter of mass social unrest and by sharp divisions with the ruling class over Pakistan’s foreign policy and geostrategic alignments.

Acting President of Pakistan Sadiq Sanjrani, left, administers the oath of office to newly elected Pakistani Prime Minister Shahbaz Sharif during a ceremony at Presidential Palace, in Islamabad, Pakistan, Monday, April 11, 2022. (Press Information Department via AP)

Shortly after his election as prime minister Monday, Shehbaz Sharif gave a nationally televised address in which he promised to make Pakistan a “paradise” for investment. At the same time, in an attempt to mollify the mass anger over spiraling prices and buy his government some time, he announced a 20 percent increase in the monthly minimum wage to 25,000 rupees or about US $135, and promised that wheat flour would be temporarily available at a reduced price. Given that the official inflation rate is over 15 percent and the rupee has depreciated against the US dollar by some 20 percent over the past nine months, the minimum wage increase, even if granted in a country where many employers flout labour regulations, will far from compensate the poorest sections of the working class for recent increases in the price of food, fuel and other basic necessities.

Yesterday, Shehbaz Sharif met with economic experts to discuss the economic crisis and in particular the threat the country’s foreign currency reserves, currently equal to no more than two months’ worth of imports, will dry up. In an attempt to avert further depreciation of the rupee, Pakistan’s central bank raised its benchmark lending rate by 250 basis points last Thursday to 12.25 percent, prompting angry denunciations from sections of business who argue the rate rise will stifle commercial activity.

Sharif’s aides have made clear that the new government’s first priority will be to resume negotiations with the International Monetary Fund (IMF). As part of a $6 billion IMF bailout Khan and his PTI government first negotiated in 2019, the previous government implemented two rounds of savage IMF austerity and “structural readjustment,” slashing social spending and subsidies on the price of essential goods and selling off public sector enterprises wholesale.

The first round of IMF-dictated “reform” came in 2019-2020. The second, adopted in January, included regressive tax increases and subsidy cuts aimed at producing more than $2 billion worth of savings by June 30 and many billions more in the years to come. However, to the consternation of the IMF, the PML-N, the other opposition parties and the corporate media, Khan reinstituted some subsidies on gas and electricity tariffs last month in the hopes of assuaging popular anger and saving his government.

Sharif is also expected to make improving Islamabad’s badly frayed relations with Washington a top priority. Indeed, the incoming government is likely hoping that if it makes geostrategic overtures to the US, the latter will prevail on the IMF, which it dominates, to be somewhat less onerous in its economic “reform” demands.

In recent weeks, the Pakistani military made it known that it opposed Khan’s stance of so-called “neutrality” on the US-NATO war on Russia over Ukraine. The Pakistan military has a close institutionalized partnership with the Pentagon that stretches back to the early years of the Cold War. Moreover, it and large sections of the Pakistani bourgeoisie calculate that India’s strategic predicament over the Ukraine war provides Islamabad with an opportunity to court Washington’s favour.

India, Pakistan’s historic rival, long ago supplanted Pakistan as Washington’s principal South Asian and Indian Ocean ally, and in recent years has become a veritable US frontline state in its military-strategic offensive against China. However, India has retained close military-security, diplomatic and economic ties with Russia, and despite strong pressure from Washington and its allies has refused to bow to their demands that it label Russia the “aggressor” and downgrade its relations with Moscow.

For weeks prior to his government’s ouster, Khan accused a “foreign power,” which he subsequently named as the United States, of being behind the efforts to unseat him and accused the opposition of colluding with it.

Sharif, in his national address Monday, made reference to this, announcing that an in-camera briefing of the parliamentary national security committee will be held to review Khan’s claims. “I will step down,” he demagogically declaimed, “if there is one iota of evidence against me.”

In his efforts to prevent the opposition from voting him out of office, Khan ran roughshod over parliamentary and constitutional norms, including prevailing on the deputy speaker to rule the non-confidence motion illegal when it was first brought before the National Assembly on April 3 and then getting the president to order parliament dissolved.

The Supreme Court, which on numerous times has given its legal imprimatur to patently illegal actions by the military, including coups, in this case ruled that the deputy speaker and Khan had overstepped their authority and ordered the non-confidence vote be held last weekend.

Khan has made clear he will not recognize the new government as legitimate, and with the aim of undermining it and pressing for new elections, he and more than 100 PTI MPs have already resigned their parliamentary seats.

Popular support for the right-wing Islamic populist PTI has fallen sharply over the past two years. Yet Khan, a one-time cricket star and self-proclaimed guardian of Islamic “values” and “anti-corruption fighter,” continues to command support among sections of the urban middle classes. On Sunday evening, hundreds of thousands of his supporters joined demonstrations in major cities across the country.

While Khan has attacked Washington, he has conspicuously avoided criticizing the military either for helping orchestrate his government’s defeat or for its close ties to the Pentagon. Clearly, Khan hopes he can win back the military’s support. Similarly, the military has denied reports that Khan tried to fire the army chief and declare martial law on Saturday in the run-up to the non-confidence vote, although the courts were reportedly on stand-by to overturn an order from Kahn sacking General Qamar Javed Bajwa.

There are widespread fears within the ruling class that factional infighting within the political establishment will exacerbate an already explosive situation where the government must impose unpopular measures aimed at improving the profitability of Pakistani capitalism and placing the full burden of the economic crisis on the working class and oppressed masses.

As in Sri Lanka, where mass protests have erupted against the government, economic conditions have become unbearable for many of the Pakistani people. The COVID-19 pandemic, which excess death estimates suggest killed 700,000 people, and now the war are driving tens of millions deeper into poverty. In 2021, according to the Wealth Inequality Database, the top 1 percent of Pakistanis monopolized 25.8 percent of the country’s wealth, while the share of the bottom 50 percent was about one-fifth that, 5.5 percent. Last month the Pakistan Institute of Development Economics reported that over 30 percent of Pakistan’s youth are unemployed.

Just as the opposition parties cynically sought to leverage the mass anger over the disastrous economic situation to wrest power from Khan, so they now fear that he will seek to rally support by denouncing them when they implement the austerity measures demanded by the IMF, including those previously agreed to by his own government.

Further complicating the situation, Shehbaz Sharif must stitch together a government comprised of parties, including the Bhutto family-led Pakistan People’s Party, that traditionally are bitter rivals of the PML-N and some of which were until recently part of the PTI-led coalition government. Moreover, all of these parties will be jockeying for position in the run-up to the next national election, which must be held by August of next year.

Undoubtedly, Washington encouraged Pakistan’s military and opposition in their efforts to remove Khan and the TTP-led government and will welcome Islamabad echoing its war propaganda against Russia. But its principal concern is with Islamabad’s close ties to Beijing. Pakistan has dramatically expanded these ties in recent years in an attempt to offset the ever-burgeoning US-India alliance, which has seen Washington give New Delhi access to advanced US-made weapons systems and endorse Modi’s provocative, ostensibly retaliatory “surgical strikes” inside Pakistan.

In his Monday speech to the nation, Sharif pledged to move forward with the $60 billion China Pakistan Economic Corridor (CPEC). For the Pakistani bourgeoisie, the CPEC constitutes a much-needed economic shot in the arm, but for Beijing, by providing pipeline, railway, and highway links to the Pakistani Arabian seaport of Gwadar, the CPEC has great strategic significance.

During the 16 months that his presidency overlapped with Khan’s prime ministership, US President Joe Biden refused to once talk to Pakistan’s government head even by phone. On Monday, White House Press Secretary Jen Psaki declared that Washington has “a long, strong and abiding relationship with Pakistan, an important security relationship.” But when asked if Biden will phone Prime Minister Shehbaz Sharif, she refused to answer, saying, “I don’t have a prediction of a call at this point of time.”

What’s Driving the Avian Flu Epidemic in Domesticated Birds

Yuko Sato

Why is avian influenza so deadly for domesticated birds but not for wild birds that carry it?

Avian influenza (AI) is a contagious virus that affects all birds. There are two groups of AI viruses that cause disease in chickens: highly pathogenic AI and low pathogenic AI.

HPAI viruses cause high mortality in poultry, and occasionally in some wild birds. LPAI can cause mild to moderate disease in poultry, and usually little to no clinical signs of illness in wild birds.

The primary natural hosts and reservoir of AI viruses are wild waterfowl, such as ducks and geese. This means that the virus is well adapted to them, and these birds do not typically get sick when they are infected with it. But when domesticated poultry, such as chickens and turkeys, come in direct or indirect contact with feces of infected wild birds, they become infected and start to show symptoms, such as depression, coughing and sneezing and sudden death.

There are multiple strains of avian influenza. What type is this outbreak, and is it dangerous to humans?

The virus of concern in this outbreak is a Eurasian H5N1 HPAI virus that causes high mortality and severe clinical signs in domesticated poultry. Scientists who monitor wild bird flocks have also detected a reassortant virus that contains genes from both the Eurasian H5 and low pathogenic North American viruses. This happens when multiple strains of the virus circulating in the bird population exchange genes to create a new strain of the virus, much as new strains of COVID-19 like omicron and delta have emerged during the ongoing pandemic.

According to the U.S. Centers for Disease Control and Prevention, the risk to public health from this outbreak is low. No human illnesses have been associated with this virus in North America. That was also true of the last H5N1 outbreak in the U.S. in 2014 and 2015.

Should people avoid poultry products until this outbreak ends?

No, that’s not necessary. Infected poultry or eggs do not enter the food supply chain.

To detect AI, the U.S. Department of Agriculture oversees routine testing of flocks done by farmers and carries out federal inspection programs to ensure that eggs and birds are safe and free of virus. When H5N1 is diagnosed on a farm or in a backyard flock, state and federal officials will quarantine the site and cull and dispose of all the birds in the infected flock. Then the site is decontaminated.

After several weeks without new virus detections, the area is required to test negative in order to be deemed free of infection. We call this process the four D’s of outbreak control: diagnosis, depopulation, disposal and decontamination.

Avian influenza is not transmissible by eating properly prepared and cooked poultry, so eggs and poultry are safe to eat. The USDA recommends cooking eggs and poultry to an internal temperature of 165 degrees Fahrenheit (74 Celsius).

Are avian influenza outbreaks happening more frequently around the world, or do we just hear more about them than we did 20 or 30 years ago?

The dynamics of the spread of avian influenza viruses are very complex. HPAI is a transboundary disease, which means it is highly contagious and spreads rapidly across national borders.

Some research indicates that detection of HPAI viruses in wild birds has become more common. Reports are seasonal, with a peak in February and a low point in September. There are ongoing outbreaks of HPAI in wild birds in Asia, Europe and Africa. Many migratory bird species travel thousands of miles between continents, posing a continuing risk of AI virus transmission.

In addition, we have better diagnostic tests for much more rapid and improved detection of avian influenza compared to 20 to 30 years ago, using molecular diagnostics such as polymerase chain reaction (PCR) tests – the same method labs use to detect COVID-19 infections.

Farmers can take steps to make their flock more biosecure, such as preventing birds and their feed from being exposed to wild birds.

What’s the prospect of developing a vaccine for poultry that could reduce the economic harm from outbreaks?

Many factors would have to be weighed before adopting vaccination as a strategy for controlling HPAI. At this time, the Department of Agriculture has not approved the use of vaccination in the U.S. for protecting birds from avian influenza.

One reason for this is that using vaccines would potentially affect international trade and poultry exports. Importers would not be able to distinguish vaccinated birds from infected birds based on the routine testing, so they might ban all U.S. poultry exports.

Vaccination also could delay outbreak detection, since it can potentially hide non-apparent infections in infected birds. And if infections go unnoticed, they could spread to other farms before farmers can put control measures in place.

Avian influenza vaccines can reduce clinical signs, sickness and death rates in domestic poultry, but they would not prevent birds from becoming infected with the virus. Ultimately, the USDA’s goal is to eradicate HPAI quickly after it is detected. However, vaccines could be used to help control an outbreak, and this is an option that the agency is investigating now.

Sweden: Only 11 individual working days lost to strikes and lockouts in 2021

Dan Henrikson

Sweden’s Mediation Institute, a government agency that mediates labour disputes between unions and employers, released a report February 24 showing that only 11 working days were lost to strikes in 2021.

View from Stockholm City Hall, Stockholm, Sweden [Source: Wikimedia Commons]

Working days lost is a common measure that government statistical agencies use to measure the extent and duration of labour conflict. The measure counts the number of working days that individual workers were on strike or locked out by employers. For example, “11 working days lost” can mean that 11 workers were on strike for one day or one worker was on strike for 11 days.

The 11 working days lost in Sweden in 2021 were the result of two strikes—one a sympathy strike—involving seven electrical workers. The Mediation Institute, in a purposefully understated comment accompanying the report, described 2021 as a “quiet year in the Swedish labour market.”

Pilots for Scandinavian Airlines (SAS) the Swedish airline, struck for seven days in 2019, an action that was the largest labour conflict in the country that year, contributing to a total of 7,577 working days lost to strikes for 2019. Fifty working days were lost to strikes in 2018. No working days were lost to strikes in Sweden in 2020.

Strikes have dramatically fallen from their peak in 1980, when nearly 4.5 million working days were lost to strikes. Strikes outside of collective bargaining rounds are generally illegal. Wildcat strikes, like those undertaken by teachers in the United States, France, and Israel during the COVID-19 pandemic, have been exceptionally rare in Sweden in recent decades.

The reason for the dramatic decline in strikes in Sweden since the 1980s and their virtual disappearance during the pandemic is the political role played by the trade unions. Close allies of the Social Democrats, the unions have played a key role in supporting a succession of Social Democrat-led governments since the 1980s that have gutted Sweden’s once relatively generous social welfare system and turned the country into a paradise for foreign investors and corporate profiteers.

The Social Democrats have held power continuously since 2014, and have implemented public spending austerity and a vicious anti-refugee policy. The social Democrat government is preparing to lead Sweden into the NATO military alliance, lining up fully with the US-led proxy war against Russia. And it has presided over a disastrous COVID-19 policy, enforcing the notorious “herd immunity” strategy that gave Sweden the unenviable distinction of having one of the highest COVID-19 death rates per capita in the world.

The Swedish ruling elite has been able to enforce this right-wing agenda thanks to its corporatist relations with the unions, which have suppressed the class struggle. Sweden’s trade unions are effectively institutions of the state, enjoying extensive legally regulated relations with employer associations, and national and local governments. The chief purpose of this extensive network, as the mediation Institute’s report demonstrates all too clearly, has been to keep a lid on opposition in the working class under conditions of growing social inequality and wage stagnation.

According to data from the Organisation for Economic Co-operation and Development (OECD), 65.2 percent of workers in Sweden were union members in 2019, the last year of available data. An additional 22.8 percent are not union members but are covered by a union contract.

The high rate of union membership in Sweden and other Nordic countries is generally attributed to the fact that unions administer much of these countries’ unemployment insurance systems, which compels workers to join unions. Under the current system, the Swedish government provides the unemployed with a minor additional sum averaging about $35 a day, while the unions provide the majority of a worker’s daily assistance.

The organisation of workers in unions in Sweden is part of a corporatist arrangement also involving industry- and national-level employer associations along with government agencies. The Mediation Institute, an agency which is analogous to the US National Labor Relations Board (NLRB), plays a large role in mediating labour disputes. This union-employer-government arrangement is broadly conceived of to limit strikes and restrain wage growth.

The Industrial Agreement (Industriavtal) between the employer associations and the Swedish Trade Union Confederation (Landsorganisationen), first signed in 1998 and renewed in 2011 and 2016, strives to “strengthen export industries’ competitiveness.”

Employer associations and unions in export industries agree on a “mark,” or target for wage growth, which then applies to wage negotiations in other sectors.

Apart from the near-elimination of strikes, the Swedish unions’ role as enforcers of the ruling elite’s decades-long assault on the living standards and rights of working people is revealed in international wage statistics. Comparative data on wages from the OECD show that, in 2020, Sweden’s median wage was $46,695 in US dollars, nearly $20,000 lower than the US median wage of $65,836. The Mediation Institute estimates that wages grew 2.7 percent in 2021, which was a wage cut in real terms since inflation was 4.1 percent throughout the year.

The effective abolition of strikes in Sweden occurs in the context of the government’s criminal herd immunity policy, by which nearly all COVID-19 mitigation measures were ignored. As neighbouring countries entered lockdowns in early 2020, Sweden kept primary and lower secondary schools open and implemented largely voluntary limits on business capacity and the size of social gatherings. As of March 1, 2022, more than 17,000 Swedes have died from COVID-19, a per-capita rate twice as high as Denmark, four times as high as Finland, and five times as high as Norway.

The COVID-19 pandemic, along with long working hours, rising inflation, and pandemic profiteering, contributed to a mass upsurge of discontent and growing militancy among workers around the world. In Sweden, however, corporations and their corporatist partners have succeeded to date in containing this discontent.

In 2021, there were few strike warnings, which typically precede an actual strike. In the most prominent warning, private sector health care workers threatened to strike after their employers sought an agreement more favourable than the public sector agreement. Kommunal, the workers’ union, said at the outset that they would not agree to substandard conditions, but did just that in mediation. The final private sector agreement omitted the retroactive 2020 wage increases and lump sum payments that the public sector agreement contained.

Notably, one of the most significant strikes in the United States in 2021 was at Volvo’s New River Valley Plant in Virginia. Volvo Trucks is a Sweden-based heavy truck manufacturer. The Volvo struggle had massive reverberations throughout the global economy, even inspiring a walkout from Volvo workers in Belgium in solidarity.

In Sweden, Volvo workers were kept in the dark about this courageous struggle by their so-called “labour representatives.” These pro-corporate organisations sought to isolate the powerful strike and suppress the workers’ demands.

Volvo workers in Virginia formed the Volvo Workers Rank and File Committee entirely independently of the United Autoworkers (UAW) to organise and give political leadership to their strike. The committee gave workers a rallying point in their two-front war against Volvo and the UAW. The committee urged workers to take up an international struggle, publishing statements on the strike calling for workers “to open up new fronts in [Volvo’s] rear,” including in Sweden itself.

Eventually, the strike was isolated by the UAW, with assistance from its international counterparts like Sweden’s IF Metall. In July 2021, the UAW helped management force through a sellout contract after it had previously been rejected by the workforce.

Democratic Party-affiliated groups and pseudo-left organisations in the United States, such as the Democratic Socialists of America, have long-advocated replicating the “Scandinavian model” of so-called social democracy.

This would entail the United States government implementing corporatist arrangements, particularly the expansion of dues-paying membership among the AFL-CIO, UNITE HERE, and other similar labour organisations. Democratic Party politicians such as Bernie Sanders and Alexandria Ocasio-Cortez have also publicly expressed admiration for the so-called “Scandinavian model.”

Democratic President Joe Biden, as part of his efforts to posture left, has made many public statements encouraging the expansion of the corporatist trade unions. What this means in practice is visible in Sweden, with the organised suppression of class struggle and wage payouts to workers, amid record-setting inflation and a pandemic that has claimed tens of thousands of lives, with many more suffering debilitating after-effects from Long COVID.