US interest rate policies leading to major shifts in global currency markets

Nick Beams

The rapid rise in inflation, which is pushing the US Federal Reserve to lift interest rates, is causing shifts within the global financial system reflected in the sharp rise of the dollar against other major currencies.

With inflation in the US running at more than 8 percent, the Fed is expected to lift its base interest rate by 0.5 percentage points at its meeting next month with further rises to come later in the year.

Acting US Federal Reserve Chair Jerome Powell announces interest rates increase on March 16, 2022 (Source: CSPAN)

When the COVID-19 pandemic began in 2020, the major central banks cut interest rates in unison to historic lows to support financial markets, sending stock prices to record highs. But now divergences have opened because not all of them want to proceed as rapidly as the Fed with interest rate increases.

This has led to a rapid rise in the US dollar which, according to the Financial Times (FT)“is ripping through markets as investors bet most central banks will lag behind the pace of rises” by the Fed.

Consequently, the dollar index, which measures its strength against a basket of other currencies including the euro, the yen and the pound, hit a 20-year high yesterday.

The euro is down to a five-year low against the dollar and could fall even further. In trading this week, it fell even further than in March 2020 when markets were in turmoil at the start of the pandemic.

While the European Central Bank (ECB) has indicated it is moving to tighten monetary policy, it is not expected to shift as rapidly as the Fed. This is because of the impact of the Ukraine war on the euro zone economy with fears that moves to impose a complete embargo on Russian energy supplies will have a recessionary impact.

The ECB must also tread very carefully lest a too rapid tightening of monetary policy causes major problems for the highly indebted southern European economies, especially Italy, and leads to a return of the sovereign debt crisis of 2012.

Last week, the British pound fell to its lowest level against the dollar since late 2020. While the Bank of England (BoE) has begun to raise interest rates, the developing contraction of the British economy is giving rise to expectations the rises will not be as large as the Fed.

Retail spending is down, with sales falling 7.9 percent in March compared to the previous month, consumer confidence is plunging, reaching a near all-time low and there are indications of a decline in business activity.

According to Chris Williamson, the chief business economist at S&P Global: “Orders received by manufacturers have almost stalled, driven by an increasing loss of exports, and growth of services has slumped to among the weakest since the lockdowns of early 2021.”

This has given rise to the expectation that the BoE will not raise its bank rate by 0.5 percent points when it meets next month, leading to a fall in the value of the pound.

The widest divergence in currency values is between the dollar and the Japanese yen. The Japanese currency has dropped to a 20-year low against the dollar with further falls likely. Yesterday the Bank of Japan made clear it is not moving away from its low interest rate regime and will continue to intervene to keep bond yields close to zero.

The yen, normally regarded as a safe haven in times of economic turmoil, has fallen 12 percent so far this year and is ranked the worst performer out of 41 currencies tracked by the Wall Street Journal (WSJ)—worse than even the Russian ruble and the Turkish lira.

Reporting on the yen’s slide earlier this week, the WSJ noted that “if the yen were a smaller currency, its slide might have less importance to financial markets. But the yen is key to global finance, ranking as the third-most-traded currency in the world.”

The slide will have a significant effect on the $22 trillion US Treasury market where Japanese financial institutions are the largest foreign purchasers of US government debt.

But the capacity of Japanese finance capital to buy US debt, under conditions where the US is moving to sell off some of the financial assets it has purchased as part of its monetary tightening policy, is under strain.

When buying debt, purchasers take out hedges against currency movements to protect the value of their trades. But the currency movements have become so large that the cost of hedging means the additional return an investor would obtain from holding US rather than Japanese bonds has almost disappeared.

Earlier this month, Japanese finance minister Shunichi Suzuki warned of damage to the economy because of the falling yen. “Stability is important and sharp currency moves are undesirable,” he said.

While a weak yen had its merits, the demerits were “greater under the current situation where crude oil and raw material costs are surging globally” making these items more expensive.

China is also being adversely affected, amid a battle within the government, reported on by the FT, over how to deal with the effects of the crisis in the property market on the economy and the financial system.

A group led by Vice Premier Liu He is pushing for a loosening of the credit restrictions that have hit Evergrande and other large property developers. One government adviser, who shares Liu’s views, has warned that continuing problems “may cause bad debts to spike and the entire financial sector to go under.”

But this is being opposed by another faction in the cabinet which says that claims of a financial collapse are overblown, and the clamp down must continue.

These problems are being exacerbated by the US interest rate rises which have seen the renminbi depreciate. If China does loosen credit and monetary policy this fall, this could accelerate and lead to a movement of capital out of the country.

So-called emerging and developing countries are also being hit. The International Monetary Fund’s latest Global Financial Stability Report noted that a quarter of the countries that had issued hard currency debt had liabilities trading at distressed levels.

The higher interest rate regime being enacted by the Fed is leading to significant movements on Wall Street. Earlier this week, the Dow fell by 800 points with the S&P 500 index dropping by 2.8 percent to bring its fall for the year to 12 percent.

The decline in the tech-heavy NASDAQ index has been even sharper. It has lost 20 percent for the year and is now down to its lowest level since the end of 2020, wiping out all the gains for 2021.

Rising interest rates and the expectation of further increases is the main factor. This is because in the orgy of speculation that has been fuelled by the Fed’s financial support, the “valuation” of high-tech companies is not based on their actual profits—many of them are making a loss—but on the “expectation” of future earnings.

The “expected” flow of future earnings—in effect a gamble that the company will take off—are discounted at the prevailing rate of interest with a higher rate leading to a decline in the expected value of the company.

And in a warning of the developments in the real economy, yesterday it was announced that the US economy had unexpectedly contracted at an annualised rate of 1.4 percent in the first quarter of this year. That trend is set to continue if interest rate rises start to hit the housing market.

So far, the Fed’s rises have been small and even the planned rises are not great by historical standards. But the fact that even these small rises are leading to major problems is a further indication of the inherent instability in the US and global financial system.

US GDP drops 1.4 percent in first quarter amidst Omicron surge and war in Ukraine

Shannon Jones

The US economy shrank at a 1.4 percent annual rate in the first quarter of 2022, surprising economists who had expected a 1 percent rise in GDP, which measures the output of goods and services. The fall reflected the myriad problems facing US and world capitalism including the explosion of the highly contagious Omicron variant of COVID-19, the expanding impact of the war in Ukraine and as well as ongoing supply chain issues.

The decline in first-quarter GDP was mostly due to declining inventories and an expanding US trade deficit. Lower government spending on pandemic relief also contributed.

In the face of this reversal, the White House attempted to downplay the significance of the GDP fall, blaming the Russian invasion of Ukraine and a statistical quirk relating to inventories. “While last quarter’s growth estimate was affected by technical factors, the United States confronts the challenges of COVID-19 around the world, Putin’s unprovoked invasion of Ukraine and global inflation from a position of strength,” Biden stated. He added, “consumer spending, business investment and residential investment increased at strong rates.”

Biden’s bravado can’t paper over the accumulating economic problems plaguing global capitalism. The International Monetary Fund was recently forced to sharply revise downward its growth predictions for 2022 to 3.6 percent while projecting no return to pre-pandemic levels of growth until at least 2026.

While US exports hit a record in March of $169.3 billion, they were far outpaced by imports, which reached $294.6 billion. As a result, the trade deficit in goods widened nearly 18 percent to $125.3 billion last month, a record figure.

Despite these figures the Dow Jones Industrial Average was up 1.85 percent Thursday as the poor GDP numbers lessen the pressure on the US Federal Reserve, which meets next week, to mount an aggressive campaign of raising interest rates. A rise of 0.5 percent by the US central bank is widely expected, but further increases may be scaled back.

Wall Street is awaiting with some trepidation the rise in interest rates and the winding down of the Fed’s cheap credit policies that have massively enriched the financial aristocracy while fueling inflation and expanding the stock market bubble.

Containers stacked up at the port of Los Angeles and Long Beach, California

Adding to uncertainty is the widening war in Ukraine and its impact on the world economy. Russia’s announcement that it is suspending oil and gas shipments to Poland and Bulgaria threatens to further drive up energy prices. Moscow had demanded that the two countries pay in rubles, something that the two countries have refused. The action reflected a further ratcheting up of tensions as the war threatens to spread beyond the borders of Ukraine, with incalculable consequences.

The broader effects of the war have led to economic shocks, especially on workers and the oppressed in less developed countries, sparking mass protests against rising food and energy prices. This includes Sri Lanka, where workers took part in a one-day general strike against the Gotabhaya Rajapakse government. Strikes and social protests are mounting as well in the US and Europe, witnessed by the walkout by 5,000 Stanford nurses this week over abysmal pay levels and unbearable working conditions.

American workers continue to see their living standards hammered by inflation as they spent more in the first quarter but received proportionally fewer goods and services in return.

In an indication of the devastating impact of inflation on workers’ living standards, US prices rose at an annual rate of 8.5 percent in March while wages are up only 5.6 percent on the year. Rising food prices will continue to play havoc with family budgets, as indicated by soaring commodity prices for basic foodstuffs. Soybean prices are up 26 percent this year while corn futures are up 37 percent. US food prices were up 8.8 percent year over year in March and the World Bank projects that food prices will rise by 23 percent this year, after surging 31 percent in 2021, creating untold hardship.

The decline in US GDP came after a 6.9 percent annualized rise in the fourth quarter of 2021. It was the first fall in GDP since the early months of the pandemic when large sections of the economy were shut down due to the spread of COVID-19. The fall of GDP in the first quarter came despite the abandonment by local, state and federal government agencies of virtually all remaining pandemic restrictions, with both air travel and hotel occupancy showing substantial increases.

New jobless claims stood at 180,000 last week, near an historic low, as businesses continue to hold on to workers due to a tight labor market. Employers have added an average of 600,000 jobs each month and the official unemployment rate is at 3.6 percent, low by historical standards, although this number is deceptive since many workers have dropped out of the workforce due to pandemic-related concerns.

Even though real wages are falling due to inflation, there are increasing pressures on the US Federal Reserve to undermine workers’ bargaining power by driving up the unemployment rate through monetary tightening. The Fed raised interest rates by 0.25 percent in March, the first increase since 2018, and is planning six more rate rises this year.

In advancing the need for rate increases, Fed Chairman Jerome Powell last month cited a “very tight labor market—tight to an unhealthy level…” By tightening credit the US central bank aims to dampen demand and push up unemployment in order to undermine workers’ ability to press for higher wages. A poll of economists conducted by the Reuters news agency gave a 25 percent probability of a US recession in the next 12 months and 40 percent within two years. Growth would slow to 3.3 percent this year and just 2.2 percent in 2023.

There are already signs of slowing in certain sectors. Reacting to the rise in interest rates, Detroit-based Rocket Mortgage announced plans to cut hundreds of jobs and is offering buyouts to 8 percent of its 26,000 employees. Other mortgage lenders have announced recent job cuts in reaction to the rate rises, including Wells Fargo and Flagstar Bank.

In March automaker Stellantis announced the elimination of hundreds of jobs, including one-half of its remaining workforce at its Belvidere, Illinois, assembly plant, as well as job cuts at some Detroit area assembly and stamping plants. On Wednesday Ford announced that it is cutting 580 engineering jobs.

The impact of any slowdown in the economy on top of the stress produced by soaring inflation and two years of a deadly pandemic will inflame social anger in the working class in the US and globally.

Zero-COVID strategy drives Omicron cases down across China

Benjamin Mateus

Despite the claims in the corporate media in the US and elsewhere that there is an accelerating wave of COVID-19 in China, the actual figures demonstrate that Chinese public health workers are successfully containing an outbreak of Omicron BA.2. The number of infections is significantly lower than in the United States—where the Biden administration claims that coronavirus is no longer a pandemic—and fewer Chinese have died in two months than die in the US every single day.

The death toll in the US has fallen to a “low” of about 400 a day. By contrast, the cumulative death toll in China since Omicron BA.2 invaded the country from overseas in early March is 287—over a period of nearly 60 days! During the same period, 42,000 Americans have lost their lives to COVID-19, more than 100 times as many as in China.

By midnight of April 27, 2022, the National Health Commission (NCH) of the People’s Republic of China had confirmed 4,923 deaths across mainland China. On March 1, 2022, that figure was at 4,636. All but two of these 287 deaths occurred in Shanghai, the main financial hub and a center of both manufacturing an world trade, when cases began to explode in mid-March.

The first of these deaths in the financial hub occurred on April 17, when three fatalities were reported. By then, cases had peaked with a seven-day average of daily cases at 26,412, and several rounds of mass testing had already been conducted. The lockdown was approaching its third week.

Two days later, on April 19, another seven deaths were reported, raising mainland China's total to 4,648. The next day brought another seven deaths, and the day after, eight, bringing the total to 4,663. On April 22, Shanghai saw its first double-digit count in deaths with 11 fatalities, and the number rose to 12 the day after, bringing the cumulative number to 4,686.

Last Saturday, April 24, Shanghai health authorities reported a sudden jump in fatalities to 39 deaths, and then on Saturday, another 51. The rise in counts has remained stable since, with 51 on Monday and 48 on Tuesday. Yesterday, 47 perished.

Since March 1, 2022, there have been 677,980 COVID cases across the mainland, with the lion’s share of infections in Shanghai, 558,147 as of Wednesday. Yet, little more than 96,000 of these cases were confirmed as symptomatic. In other words, if not for mass testing and contact tracing, almost 80 percent of community infections could have been missed.

Assuming a commonly accepted infection fatality ratio (IFR) for COVID of around 0.5 percent, another 300 deaths can be expected over the next few weeks at the present levels of symptomatic infections.

The importance of making such a detailed account of these statistics is that, repeatedly, various media outlets have cited experts claiming that the numbers reported by Chinese authorities are rigged to provide a rosier picture of their pandemic response and therefore shouldn’t be trusted. The apparent political intent is to malign the Zero-COVID policy and the efforts to prioritize the population's lives over “the economy,” i.e., corporate profit.

For instance, CNN quoted infectious disease expert Dr. Peter Collignon, an Australian National University Medical School professor, saying that Shanghai should have had as many as 700 deaths for every 100,000 cases because Hong Kong had 9,000 COVID deaths out of 1.19 million infections in January 2022. Minneapolis epidemiologist Dr. Michael Osterholm and others have made similar statements.

As to the lower death count, first, the response in Shanghai has been far different than what transpired in Hong Kong. Early medical attention and treatment can stem complications from an infection. Every effort is being made to administer and attend to asymptomatic and symptomatic cases.

Second, given the data being presented by the NHC, the time course of infections to deaths is proceeding according to expected epidemiological predictions. The apparent lower death toll as compared to all reported cases has everything to do with the Chinese health authorities identifying all infections, which commonly has not occurred in other countries.

During the massive waves of infections in Europe, the US, and everywhere Omicron gained a firm foothold, the positivity rate spiraled upwards, implying a significant undercount of infections. Most cases being reported are among symptomatic patients seeking medical attention.

For instance, according to Worldometer, there have been 82.8 million COVID infections during the pandemic. However, according to a recent seroprevalence study by the Centers for Disease and Prevention (CDC), the actual estimate of COVID infections by February 2022 is closer to 200 million. And this does not consider a considerable rate of reinfections.

Suppose we were to employ the 0.5 percent IFR rule for COVID, based on the 80 million estimated infections. In that case, the US would be expected to suffer 400,000 COVID deaths. But the current official death toll is approaching one million, consistent, based on the IFR, with an infection total of 200 million.

Presently, close to 400 people are still dying from COVID every day. But these grim tolls are spun in a positive light by the White House and its coronavirus experts.

Despite the turmoil Chinese health officials faced in the latter part of March and into April, their persistent efforts appear to be gaining on the virus. Indeed, many of the recent reports in the bourgeoise press have begrudgingly acknowledged that efforts to contain the pandemic are proving effective.

The current seven-day average of daily cases has declined to 17,000, a 35 percent decline over 11 days since its peak. On Wednesday, there were only 11,285 new locally transmitted infections across the mainland, the lowest figure Since April 3. If we exclude cases reported in Shanghai, mainland China found only 663 locally transmitted cases yesterday. In Jilin province, site of the initial outbreak in the northeast, COVID cases are down to 154.

Shanghai too has reported its lowest figures since the mid-April peaks of over 27,000 COVID cases. Yesterday there were just 10,622 COVID cases reported, of which 1,292 were symptomatic, prompting officials to begin the steps to exit lockdown by easing restrictions in districts where COVID-19 infections were eliminated.

Residents line up for the first round of mass COVID testing in the Jingan district of western Shanghai, China, Friday, April 1, 2022. (AP Photo/Chen Si, File)

However, the outbreak in Beijing is being followed carefully by the world press as authorities explained that for about a week, community transmission was occurring undetected. Most of the initial cases were discovered in Chaoyang District at a middle school, pushing authorities to respond expeditiously.

Yesterday, 48 symptomatic and two asymptomatic cases were reported in China’s capital, underscoring the concern that the outbreak is far more extensive than current figures indicate. Efforts are underway to conduct three rounds of mass testing citywide this week, with the first completed on Monday for the more than 19.8 million residents.

As in Shanghai, a jump in cases is expected. It is not a harbinger of an explosion of cases, but a product of the systematic effort to find all infections to assist in long-established public health controls and to eliminate the pathogen from the community. Currently, only Chaoyang District is in lockdown while movement restrictions are enacted in high-risk neighborhoods. A wider lockdown may be implemented should the citywide testing indicate community spread is much more extensive.

Rather than applauding the monumental and essential efforts undertaken to contain these outbreaks, the spokespersons for the financial oligarchs decry these efforts. Colm Rafferty, chairman of the Beijing-based American Chamber of Commerce in China, told the Wall Street Journal, “Today, the situation in Beijing appears to be stable, but we remain concerned about the possibility of a citywide lockdown.”

The Journal added, “A total of 46 cities and their 343 million inhabitants across the country were under partial or full lockdowns or faced some degree of movement restrictions as of Monday … These cities account for more than 24 percent of China’s population and over 35 percent of its gross domestic product.”

The Journal never bothers to ask, “To what extent did Omicron disrupt economic activity in the US?” More than 80 million people were infected from December through February, accounting for one-quarter of the US population. It also killed 170,000 people during that period, including a substantial number of previously fully vaccinated individuals.

More than 8.7 million Americans were out of the labor market because of COVID or caring for someone infected. More than 5.3 million parents and caregivers were taking care of children who were home from school, and airlines had to cancel flights due to labor shortages. As businesses, restaurants, and retail stores were cutting back hours, health care workers were once more being brought to the brink of exhaustion as emergency rooms and hospitals were brimming with infected patients. 

Chris Williamson, a chief business economist at IHS Markit, said of the pronounced pullback in services and manufacturing sectors, “Soaring virus cases have brought the US economy to a near standstill at the start of the year.”

The Journal wrote on January 24, “In the US, IHS Markit’s composite purchasing managers index—which measures activity in both the manufacturing and services sectors—fell to 50.8 in January from 57 in December, to hit an 18-month low … Much of the economic impact comes from COVID-related staff absences, Simon MacAdam, senior global economist at Capital Economics, said in a note to clients.”

To have allowed the coronavirus to run roughshod over the Chinese population would have been another historic assault on the international working class, one of many they have endured during the pandemic.

However, based on current trends, the Zero-COVID strategy should end the present threat by the virus in China in less time than it took for Omicron to sweep through the populations of the US and Europe like a tsunami. On a social scale, measures to eliminate the virus have consistently proven the correct response. However, the war against the coronavirus is a war against the socioeconomic conditions that allow the threat to persist. Defeating the virus will require a frontal assault against capitalism.

The Global Economy Shock of the Ukraine War

Patrick Cockburn

Photograph Source: Ray Weitzenberg – CC BY 2.0

The war in Ukraine is already leading to fewer weddings in Syria because it has increased the price of the gold jewellery which is a traditionally part of Syrian wedding contracts. Prospective husbands who promised a fixed quantity of gold to their bride-to-be find that they can no longer afford to pay for it.

When Russia invaded Ukraine on 24 February, the price of gold rose sharply and dozens of weddings were postponed or cancelled in Syria according to Saeed Ali, a 46-year-old goldsmith and currency trader in Qamishli in north east Syria.

“A relative of mine had a provision in his marriage contract to buy 50 grams of gold for his fiancée,” he says.

“This would have cost him $2,500 before the Ukraine war, but after it broke out he could only buy 43 grams for that sum and this caused problems with his marriage.”

In small and large ways, the war in Ukraine is affecting the rest of the world, but nowhere is its effect more devastating than on countries such as Syria, Afghanistan, Yemen and South Sudan, to name but four, which have been torn apart by decades of warfare. For them the Ukraine crisis is the final destructive blow for weak governments and societies that are barely holding together.

Some 80 per cent of Syrians are rated as impoverished with many on the edge of starvation, while 12.4 million are described by the World Food Programme as being “food insecure.”

Many are jobless or grossly underpaid after a collapse in the Syrian currency caused by harsher American sanctions in 2020 that established what amounts to an economic siege.

A Syrian government employee today earn the equivalent of $25 a month and their Kurdish counterparts $75. But in the last couple of months the price of basic foodstuffs such as sunflower oil, sugar and tomatoes have doubled or tripled while the price of bread has risen by 50 per cent.

“Incomes are the same here but prices are crazy,” says Salem Amin, 43, who sells cooking oil in all Syrian cities.

“All this is happening because of Putin’s invasion of Ukraine: the fire may be there, but we are burning up here in Syria.”

The economies of these shattered countries in the Middle East and Africa were already close to capsizing because of endless military conflicts before the war in Ukraine began, but they are now close to sinking entirely.

Catastrophic though their situation is there is limited international interest in their plight because world attention is fixated on Ukraine and what is fast becoming a proxy war between Russia and the US.

Atrocities and mass killings in these forgotten war zones seldom get on the international news agenda, though they would be headline news if they occurred in the Donbas, Kharkiv or Odessa.

Many have been ignored for a long time, so it is scarcely surprising that their fate attracts little interest now. In South Sudan, the world’s newest nation, for instance, some 400,000 people were killed in a civil war between 2013 and 2018 that few outside the region ever knew was happening.

This has supposedly ended, but in fighting earlier this month 44,000 people had to flee for their lives from their burning villages after losing their houses, belongings and food stocks.

Bad though the situation has been for years, Ukraine has made it that bit worse primarily because it has raised food and fuel prices for those who can least afford to pay them.

Matthew Hollingworth, the South Sudan country director of the World Food Programme (WFP), says that of the 7.4 million people suffering from food shortages in South Sudan the WFP will only be able to feed 4.4 million because there is not enough money to pay for more rations.

Of the $1.7bn needed for humanitarian assistance only 10 per cent has been funded by donors.

“We are used to making do with 50 or 60 per cent of what we ask for,” he says, but he is shocked by a shortfall of this size when costs are soaring.

Reverberations from Ukraine are battering a country already hit by multiple disasters resulting from 30 years of savage fighting, the Covid-19 pandemic, and four years of flooding of the vast Sudd swamp on the White Nile which prevents villagers from fishing in the wet season and pastoralists grazing herds of cattle in the wet season.

“They no longer have a dry season,” says Hollingworth. “The pastoralists have to take their herds to new territory where they are not always welcome.”

It is a measure of the all-embracing effect of the war in Ukraine that it is now affecting the cattle herders in the swamplands of South Sudan as it is the marriage market in Syria.

In both cases people with very little are finding that they are even less able to meet their needs than before. Yet the crisis is not solely economic because it means increased great power competition which will destabilise some of the most fragile states in the world.

These countries were often the arenas where the proxy wars between the US and its allies and the Soviet Union were fought out between the late 1940s and 1989.

A second confrontation between Russia and the Nato powers could have a similarly destabilising effect.

The Backstory of NATO, Ukraine and Putin’s Fears

Richard Miller

Photograph Source: Sergei F – CC BY 2.0

A widespread misconception of NATO’s relation to Ukraine has been sustained by silence in news sources and falsehoods by pundits. According to this myth, the NATO-Ukraine connection, prior to Russia’s current horrific invasion, was a matter of Ukraine’s asking to join and NATO’s not saying “No.” In fact, over the last fourteen years, NATO’s conduct has gone far beyond openness to eventual admission, in engagements that have included extensive and expanding joint military operations in Ukraine. This involvement, which was accompanied by US efforts to shape Ukrainian politics, does not in the least affect Putin’s moral responsibility for the carnage he is inflicting. But awareness of this history should affect vitally important assessments of the proper response.

In 2008, William Burns, then U.S. ambassador to Russia and now CIA director, cabled from Moscow, “Ukrainian entry into NATO is the brightest of all redlines for the Russian elite (not just Putin) …I have yet to find anyone who views Ukraine in NATO as anything other than a direct challenge to Russian interests.” As Burns’ cable suggests, Ukraine has distinctive geopolitical significance for Russia. It is the next-largest country in Europe, after Russia, dominates the northern border of the Black Sea, and has a 1,227-mile land border with Russia. Nonetheless, at the end of the 2008 Bucharest NATO Summit, when expansion to Russia’s borders was virtually complete, NATO, led by the US, declared agreement on its completion: “We agreed today that these two countries [Ukraine along with Georgia] will become members of NATO.” In 2011, a NATO report noted, “The Alliance assists Ukraine … in preparing defence policy reviews and other documents, in training personnel, … modernising armed forces and making them more interoperable and more capable of participating in international missions” — international cooperation that had already included a joint Black Sea naval exercise with the US.

On February 22, 2014, large, increasingly militant months-long protests centered in Independence Square in Kyiv led to the deposition and flight to Russia of a president who had depended on strong electoral support from autonomous Russophone regions in the east and had sought to balance cooperation with NATO with positive relations with Russia, opposing integration with the EU. A strongly pro-Western government came to power, with the composition hoped-for in vigorous US efforts to “midwife” it, as the US ambassador put it in a Russian-intercepted phone conversation. Russia occupied Crimea and sent military support to secessionist forces in the east.

One response was the Minsk agreements of 2014 and 2015, signed by representatives of Ukraine, Russia and the separatist regions. They aimed for autonomy compatible with Ukraine’s sovereignty in the eastern regions and Ukrainian neutrality, with international guarantees, including the “pullout of all foreign armed formations … [and] military equipment from the territory of Ukraine”  and the permanent monitoring of the Ukrainian-Russian border. NATO’s response was very different: an extensive increase in joint military activity in Ukraine,  including Operation Fearless Guardian in 2015, in which the 173^rd Airborne trained three Ukraine brigades over the course of six months. The Brussels NATO Summit in June 2021 declared, “We reiterate the decision made at the 2008 Bucharest Summit that Ukraine will become a member of the Alliance ….  We welcome the cooperation between NATO and Ukraine with regard to security in the Black Sea region.  The Enhanced Opportunities Partner status granted last year provides further impetus to our already ambitious cooperation …  with the option of more joint exercises ….  Military cooperation and capacity building initiatives between Allies and Ukraine, including the Lithuanian-Polish-Ukrainian Brigade, further reinforce this effort. We highly value Ukraine’s significant contributions to Allied operations, the NATO Response Force, and NATO exercises.” In March 2021, Putin had begun the shift of military forces toward Ukraine. On February 24, 2022, he announced his horrific invasion, denouncing “the eastward expansion of NATO, which is moving its military infrastructure ever closer to the Russian border.”

This history provides evidence for a hypothesis about a crucial motivation for Putin’s aggression: the crucial impetus was a desire to push back at the extension of active NATO military engagement across Burns’ “red line.” This does not remotely justify his aggression and the carnage that he has inflicted, any more than my leaving my wallet on a seat in my unlocked car affects a wallet-snatcher’s moral responsibility for his thievery. But one’s account of the causes of Putin’s aggression should make a great deal of difference to one’s assessment of the proper response.

For one thing, if this was the impetus, Ukraine-Russia negotiations aiming at Ukrainian neutrality could have provided an off-ramp from carnage. On March 16, the chief Ukrainian negotiator and the chief Russian negotiator separately declared openness to such a settlement, openness affirmed by Zelensky on March 21. Progress was impeded by Biden’s naming Putin “a war criminal” on March 16,  his declaration the next day that Putin is “a pure thug,” and the March 20 assertion by the US ambassador to the UN, “the Russians have not leaned into any possibility for a negotiated and diplomatic solution.” Suppose, on the other hand, that entrenched Great Russian ethnonationalism is what drives Putin, leading him to aggressively unite Russians and Ukrainians in one sovereign nation, or that he is driven by an irrepressible urge to restore the grandeur of the Russian Empire. These hypotheses, which make it harder to explain the timing of Russia’s incursions, support impeding those negotiations as doomed endeavors when counterforce was needed, despite the continued carnage it guaranteed.

The choice among these hypotheses has further, momentous global importance in judging current arguments for a more confrontational, miliitarized American foreign policy. Eminent advocates such as Robert Gates, Secretary of Defense under G.W. Bush and Obama and CIA Director under G.H.W. Bush, have claimed that Russia’s invasion expresses an irrepressible urge, paralleling an aspiration that drives China, to “recover past glory” and “restore the Russian empire” and have called for an end of “Americans’ 30-year holiday from history,” “a dramatic change” including “a larger, more advanced military in every branch” and more assertive rivalry with Russia and China which greatly expands the use of “instruments of power … that played a significant role in winning the Cold War.” Robert Kagan argues for the same surge in order to confront Russia’s drive to “reclaim its traditional influence” out of a “centuries-long habit of imperialism,” an impetus paralleled by Chinese longings to return to traditional domination of East Asia. Stephen Kotkin bases his calls to arms on the need to resist Russia’s “perpetual geopolitics” based on the view of Russia as “a providential power” and similar imperatives in China.

Awareness of the role of NATO expansion in Ukraine should deepen fears of the suffering the revival of the Cold War could cause worldwide. Of course, the larger history of the carnage that the US has inflicted to sustain its geopolitical preeminence in power is a vital basis for organizing resistance to these appeals. But concealing the history of US-led involvement in Ukraine aids the exploitation of widespread justified revulsion at Putin’s brutality in Ukraine to weaken resistance. The myth should be busted, as well.

Johnson government acted unlawfully in policy that led to mass deaths in care homes, UK High Court rules

Robert Stevens

The High Court in London has ruled that the Conservative government acted unlawfully in the early weeks of the pandemic when it discharged thousands of untested hospital patients into care homes.

Lord Justice Bean and Mr Justice Garnham stated following a hearing in March that the policy failed to take into account the risk of asymptomatic transmission of COVID-19.

In this April 20, 2020, photo, nurses guide a resident at Wren Hall nursing home in the central England village of Selston. (AP Photo/Frank Augstein)

This was one of four policies at issue in the case—part of a declared herd immunity strategy that transformed care homes into killing fields in which tens of thousands of elderly and vulnerable people died preventable deaths. “About 20,000 residents of care homes in England died of COVID-19 during the first wave of the pandemic in 2020,” the ruling notes.

Over 193,000 are now dead in Britain from COVID; fatalities overseen by Prime Minister Boris Johnson who infamously declared, “No more fucking lockdowns, let the bodies pile high in their thousands.”

The ruling tears to shreds government lies that it protected care homes by surrounding them, in the words of then Health Secretary Matt Hancock, in a “ring of steel.”

The defendants in the case were the Secretary of State for Health and Social Care (Hancock), National Health Service England, and Public Health England (PHE). It was brought by Dr. Cathy Gardner and Fay Harris whose fathers, Michael Gibson and Donald Harris, died in care homes after testing positive for COVID-19.

The judgement states, “Claimants seek declarations that certain policy documents issued by the Defendants during the relevant period, and the policy decisions recorded in those documents, constituted breaches of their fathers’ rights under the European Convention on Human Rights, or alternatively were unlawful and susceptible to judicial review on common law principles.”

The High Court ruled that two government policies were unlawful: The March 2020 Discharge Policy, the basis on which thousands of patients were sent from hospitals into care homes to free up hospital beds; and the April 2 Admissions Guidance, providing care homes with advice on the admissions of people from hospitals.

Point 5 of the summary states that “the drafters of those documents failed to take into account the risk to elderly and vulnerable residents from non-symptomatic transmission, which had been highlighted by (among others) Sir Patrick Vallance [government Chief Scientific Officer] in a radio interview as early as 13 March.”

The judges found it was “irrational for the DHSC [Department for Health and Social Care] not to have advised until mid-April 2020 that where an asymptomatic patient (other than one who had tested negative for COVID-19) was admitted to a care home, he or she should, so far as practicable, be kept apart from other residents for 14 days.”

Representing Dr. Gardner and Harris, Jason Coppel QC told the court, “The care home population was known to be uniquely vulnerable to being killed or seriously harmed by Covid-19.

“The Government’s failure to protect it, and positive steps taken by the Government which introduced Covid-19 infection into care homes, represent one of the most egregious and devastating policy failures in the modern era.

“That death toll should not and need not have happened.”

Speaking after the ruling, Dr. Gardner and Harris called for Johnson’s resignation. Dr. Gardner told Sky News, “When secretary of state Matt Hancock said that he’d thrown a protective ring around care homes right from the start—I heard him say that on television and my chin nearly hit the floor because all of us who were involved in any way with care homes at the start of the pandemic knew that was absolutely not true.

“It was a lie. It was a lie then and it is a lie now. They didn’t do anything to protect my father, there was no help given to care homes and the death toll in those first few weeks of the pandemic was catastrophic.

“I think they never imagined they were going to be found out. You only have to look at the parties [that government officials held in Downing Street] to realise they never think they’re going to be found out.”

Covid-19 Bereaved Families for Justice campaign group spokesperson Charlie Williams said, “We’ve always known that our loved ones were thrown to the wolves by the government, and the claims made by Matt Hancock that a ‘protective ring’ was made around care homes was a sickening lie. Now a court has found their decisions unlawful and it’s clear the decisions taken led to people dying who may otherwise still be with their loved ones today.”

Williams’ father Rex, aged 85, was one of 27 people who died in the same Coventry care home.

The ruling is a damning indictment of government policy, but as with every intervention by the judiciary it lets the government off the hook on the essential issues. The claimants had an “important and legitimate claim,” the judges ruled, “but we must emphasise at the outset what it is and what it is not. It is not an inquest concerning the deaths of Mr Gibson and Mr Harris alone. On the other hand, the case is not a public inquiry but a judicial review. There has been no oral evidence. Evidence of opinion about the actions and decisions of the Defendants is not admissible.”

The ruling documents in detail how from the very earliest stages of a pandemic, many weeks before thousands of NHS patients were flooded into care homes, a growing body of scientific opinion and modelling indicated that COVID could be transmitted by asymptomatic people.

But it goes on to say that whereas there was “no evidence” that Hancock “considered” the question of whether to quarantine care home arrivals from hospitals for 14 days, there was also no evidence that “he was asked to consider it”. No one can shoulder any blame since it was the “drafters of those documents [March 2020 Discharge Policy and the April Admissions Guidance] that failed to take into account the risk to elderly and vulnerable residents from non-symptomatic transmission.”

Sections of the ruling pull no punches in their opposition to the bereaved families. Point 281 states, “We regard the sustained attack on the Hospital Discharge Policy as quite unrealistic.”

It adds, “Similarly, the suggestion that the Government should have made provision in March for the testing of each patient before discharge to a care home is hopeless.” This is explained away because “there were only 5,000 tests available each day by 18 March and only 10,000 each day by 27 March.”

The judges dismissed other parts of the case, including a claim against NHS England and claims under Articles 2 and 8 of the European Convention on Human Rights.

The government could not hide its relief. Johnson doubled down on his lies in Parliament after shedding a few crocodile tears, saying of the murderous care home policy, “I want to remind the House of what an incredibly difficult time that was and how difficult that decision was. We did not know very much about the disease… we did not know in particular was that COVID could be transmitted asymptomatically in the way that it was.”

Health Secretary Matt Hancock speaking at a government Covid-19 press conference inside No10 Downing Street (credit: picture by Andrew Parsons/No 10 Downing Street—Flickr)

Hancock’s spokesperson said, “This court case comprehensively clears Ministers of any wrongdoing and finds Mr Hancock acted reasonably on all counts. The court also found that PHE failed to tell Ministers what they knew about asymptomatic transmission.”

Public Health England was a Department of Health and Social Care agency, disbanded in October 2021 after being made a scapegoat for the government’s disastrous pandemic policy.

The bereaved families welcomed a ruling which declared part of the government’s COVID policy unlawful, vindicating a two-year battle to establish that their loved ones died needlessly. But it would be a mistake to conclude that any true reckoning with a government which has committed social murder on a vast scale can emerge from the High Court.

Layla Moran, the Liberal Democrat Chair of the All-Party Parliamentary Group on Coronavirus stated, “After Partygate, the billions in public money wasted and today’s ruling, the need for a public inquiry to begin immediately is clear.”

However, the planned public inquiry will be yet another whitewash, as with every previous inquiry organised by the ruling elite after a mass loss of life at its hands. What is required is not more inquiries and appeals to the criminals in Downing Street to “learn lessons”, but the removal of a hated government by a mass movement of the working class, independent of and opposed to both the Tories and Labour and directed against the capitalist system and its state.

At least a dozen US universities reinstate mask mandates as COVID cases rise

Trévon Austin

Colleges and universities across the United States, particularly in the Northeast, have reinstated mask mandates and returned to online learning in response to a recent surge of COVID-19 infections on campuses, marking the third straight academic year disrupted by the coronavirus.

Schools in New York, Washington D.C., Massachusetts, Pennsylvania, Connecticut and Texas have announced they will again require face coverings in classrooms or certain indoor spaces, with Howard University moving to remote learning to combat the spread of the virus.

Most US universities dropped mask mandates leading up to spring break, following a winter surge fueled by the Omicron variant. But several parts of the country have seen another surge in cases and hospitalizations in recent weeks, as the BA.2 subvariant of Omicron drives another wave of infections and illness.

Four schools in New York state reinstated their indoor mask mandates in recent weeks. Syracuse University, located in a county with one of the largest surges of infections in the US, announced it would once again require masks in classrooms on Monday.

Earlier this month, Columbia University in New York City announced students would be required to wear non-cloth masks in classrooms for the remainder of the spring semester. The university directly cited the city’s uptick in cases and its own increasing test positivity rate in the decision.

Columbia graduate students during a recent strike(WSWS Media)

Barnard College, a women’s school affiliated with Columbia, also reimposed its indoor mask mandate due to a spike in cases since it lifted the rule at the end of March.

The University of Rochester announced on April 15 that it would reintroduce its indoor mask mandate policy for all of its campuses and properties in response to a spike in cases that was “straining the capacity” of quarantine and isolation spaces on its campuses.

“The trending high numbers of positive student COVID cases at the University in recent days make it in everyone’s best interest to take the step of re-masking indoors right now,” the university administration said in a statement.

Four universities in Washington D.C. have also reinstated mask mandates following high transmission rates in the region and significant case increases on their campuses. The city’s COVID-19 infection rate has more than doubled in April.

Howard University students are now required to wear masks for all indoor settings and outdoor group settings until the end of the spring semester. Furthermore, the university announced many undergraduate courses would switch to remote learning during the last days of classes and final exams would be conducted virtually.

George Washington University also revived its mask mandate for all campus facilities earlier this month, noting the mandate would extend through the rest of its spring semester, exam period and commencement. American University reinstated its indoor mask mandate for all campus buildings and Georgetown is requiring indoor masking on two of its campuses.

The city of Philadelphia recently revived its mask mandate, prompting the University of Pennsylvania and Temple University to require indoor masking again starting Monday. Although the city prematurely ended the mandate Thursday, the colleges have kept the mandates in place.

In Baltimore, Johns Hopkins University announced it would begin testing all undergraduate students twice a week, noting a steep rise in cases. The school also said masks would be required in classrooms and group settings like residence hall common areas.

In Houston, Rice University announced earlier this month that students should resume wearing masks in classrooms and canceled large campus parties, citing an uptick in cases on campus.

The uptick in COVID-19 infections across US schools and campuses is a direct product of deliberate policies of the American ruling class, which seeks to normalize sickness and death. In February, the Biden administration urged states to reclassify what qualify as COVID-19 hospitalizations and deaths by using the artificial distinction between those hospitalized “with COVID-19” and those hospitalized “from COVID-19,” a far-right talking point since early on in the pandemic.

It was also in February that nearly every state began ending whatever mask mandates were still in place. Multiple states slashed the number of public COVID-19 testing sites, driving testing to its lowest level since last summer. Federal pandemic funding also dried up in March, meaning uninsured people now have to pay $100 for a PCR test.

The sabotage of any serious public health response to the pandemic, carried out by the American capitalist class and its political representatives, has needlessly killed over 1 million Americans and potentially exposed many more to the debilitating effects of Long COVID.

Police murder in Rambukkana exposes Sri Lanka’s Tamil National Alliance

V. Gnana

On April 19, Sri Lankan police forces opened fire on a crowd of protesters at Rambukkana demanding affordable fuel. Chaminda Lakshan, a 40-year-old father of two, was shot dead in broad daylight, in front of hundreds of people, and 27 were injured. This crime against the Sri Lankan workers exposes not only the Sinhalese-majority government of President Gotabhaya Rajapakse but also the Tamil National Alliance (TNA).

For most of the last month, as mass protests mounted against surging food and gas prices and for the ouster of the Rajapakse clan, the TNA was deafeningly silent. Then, on April 11, the president’s brother, Prime Minister Mahinda Rajapakse, demanded that protesters go home, or otherwise Sri Lanka would be “once again slipping into a time as dark as that in our history.” Given the regime’s massacre of tens of thousands of Sinhalese youth in the 1980s, and of Tamil civilians and Liberation Tigers of Tamil Eelam (LTTE) fighters in 2009, it was an unambiguous threat of murder.

M.A. Sumanthiran. (AP Photo/Eranga Jayawardena)

Two days later, TNA leader M. A. Sumanthiran finally broke his party’s silence on the protests to announce that it was in close, behind-the-scenes talks with the Rajapakse clan and the entire Sri Lankan political establishment. Despite the Rajapakse cabal’s mass murder of Tamil civilians at the end of the civil war in 2009, Sumanthiran made no warnings about the threat of violence. Instead, he explained that he was discussing with Rajapakse how to end the protests, stating:

Former President Sirisena spoke to me, and former President Madam Chandrika [Bandaranaike Kumaratunga] spoke to me in the morning. Other leaders are talking to me. I have been involved in many of the ongoing negotiations to try to bring stability to the political situation. My advice to the current prime minister, Mahinda Rajapakse, yesterday was that if the government itself takes steps to abolish the executive presidency, we can move forward. I personally told him my opinion.

Six days after Sumanthiran boasted of his secret talks with the Rajapakse cabal, Rajapakse’s police opened fire at Rambukkana. Saminda Lakshan’s wife, R.N. Priyanganee, fearlessly identified the uniformed government killers, telling the Ceylon Mirror: “My husband was shot. This is not going to be the last death, and many more will be shot. They are uniformed, star-studded murderers.”

There is no question about the deliberate character of the police massacre, and the fact that it was ordered from top levels in the state machine. Anuradha Rajapakse testified at the official inquiry into the shooting that a senior police officer in uniform with two stars and the royal emblem ordered: “Do not shoot high, shoot to kill.” But the officer who ordered the murder has not yet been publicly identified, arrested, or charged.

The massacre in Rambukkana raises the most serious questions about the TNA’s role. What did the TNA know? When Sumanthiran spoke personally to Rajapakse, did he discuss Rajapakse’s threat of deadly violence? Did Sumanthiran discuss plans for police killings with Rajapakse? Or did he calculate that, given mass hatred of the Rajapakse clan for its 2009 slaughter of Tamils, he could better cover up his dirty dealings with Rajapakse by not discussing them in detail, so he could claimafterwards that he did not know?

The TNA reacted to the police murder of Lakshan with a cynical Tweet, stating: “We condemn unreservedly the police shooting in Rambukkana yesterday that resulted in unfortunate deaths. An immediate independent inquiry must be held, and the Minister for Internal Security must resign forthwith.”

This begs the question: if the TNA is proposing to remove of the interior minister, why does it not call to throw out of the entire Rajapakse cabal that is leading the repression of the protests?

The TNA is working to politically shield the Rajapakse government from explosive mass anger over its murder of Lakshan, while engaging in back-channel talks with Rajapakse himself, and the entire ruling establishment in Colombo. While it cynically poses as a friend of the Tamil people, it defends the Rajapakse cabal and the executive presidency that is at the heart of the unitary capitalist state in Sri Lanka. Its claim to oppose the executive presidency is a political fraud.

Rajapakse has handed over the task of securing fuel transports to Army Commander Shavendra Silva. This officer has already been accused of human rights abuses and war crimes against the Tamil people in the final stages of the civil war in 2009. Silva’s role was so notorious that even Washington felt obliged to impose a travel ban on Silva, who has also played a leading role in suppressing protests against the regime’s malign indifference to the COVID-19 pandemic.

The TNA, speaking for a narrow layer of Tamil capitalists and upper middle class forces, are terrified of mass anti-government protests demanding affordable food and energy for the workers. Since the end of Sri Lanka’s 1983-2009 civil war and the defeat of the LTTE put them back under the control of the Sri Lankan authorities in Colombo, they have ever more closely relied on the executive presidency to defend their class privileges.

Today—desperate to save their personal fortunes and privileges even as masses of Sinhalese, Tamil and Muslim workers face hunger and impoverishment—the TNA is calling to resolve the crisis with International Monetary Fund (IMF) austerity measures. This means massive cuts to public sector jobs, wages, and pensions; privatisation of state-owned corporations; slashing social programs; and deep cuts to public education and health. Yet Sumanthiran has boasted that he personally told Rajapakse: “Talk to the IMF immediately.”