Fiji government prepares for another anti-democratic election

John Braddock

The Fiji government, led by prime minister and 2006 coup leader Frank Bainimarama, this month pushed through a controversial bill to ramp up powers of the Supervisor of Elections. The Electoral (Amendment) Bill 2022 was passed as parliament sat for its final session before general elections later this year.

FijiFirst election poster of Prime Minister Voreqe Bainimarama outside Fijian village, 2018. [AP Photo]

Introducing the bill, Attorney-General Aiyaz Sayed-Khaiyum, who is also the elections minister, claimed the changes to the Electoral Act were simply made “to reflect practical ways of implementing existing provisions of the Act.”

In fact, with Bainimarama facing his most serious challenge since elections were reinstituted in 2014, powerful sections of the ruling elite are clearly concerned about the possible outcome. The new law places extraordinary, sweeping and intrusive powers in the hands of the Supervisor of Elections (SoE) to intervene in the event of any disputes.

The amendments have three main parts. The first, and most contentious, gives the SoE the “power to direct a person, by notice in writing, to furnish any relevant information or document.” Existing laws relating to privacy are being overridden. Targeted individuals must comply with demands for information “notwithstanding the provisions of any other written law on confidentiality, privilege or secrecy.” Sayed-Khaiyum claims this power is required to allow for any inquiries into “allegations of breaches of campaign provisions.”

The second part entrenches the current opaque and complicated polling system, which uses numbers on ballot papers to replace candidates’ names. Each party may nominate up to 55 candidates, meaning with 10 parties there can be up to 550 numbers on the ballot. The amendment makes it possible for the number used by a candidate to be retained in future elections.

Finally, a new section empowers the Electoral Commission to adopt and publish “guidelines” on opinion polls, surveys and research. The pro-government Fiji Sun, which has previously been criticized by the Commission for its polling methods, immediately announced it would discontinue its monthly public opinion surveys due to the “onerous” new requirements.

Opposition parties voted against the amendment and the Fiji Law Society (FLS), Law Council of Australia and Citizens’ Constitutional Forum earlier all called for the bill to be withdrawn. Most criticism centred on the first amendment with the FLS declaring the SoE could compel any person to provide him with all or any information or documents on “virtually any pretext.”

FLS president Wylie Clarke claimed that the bill “unnecessarily attacks citizens’ rights to privacy, including the legal professional privilege.” People will not be able to appeal any decision except to the Electoral Commission whose ruling is final and cannot be appealed to or reviewed by any court.

Reacting to the widespread condemnation, on September 12 Bainimarama told the Fiji Sun the elections would be “free and fair.” “Rumours of unfair elections,” he said, “serve only to scare the general public and cause societal disruptions. I assure every Fijian that we will have elections before the cut-off date of January 2023.”

Bainimarama’s FijiFirst Party (FFP) currently rules with an extremely narrow majority, having been installed in 2018 with just over 50 percent the vote. The new law follows polls in recent months showing the FFP in some trouble, with support oscillating between 20 and 30-odd percent—roughly the same as the main opposition People’s Alliance.

Significantly, a majority of the nearly 690,000 registered voters are for the first time aged under 40, with a large cohort in the 21-30 age range.

Elections in Fiji are “democratic” in name only. Eight years of direct military rule followed Bainimarama’s 2006 coup before formal elections in 2014, won by the FFP and again in 2018. The US and its local allies, Australia and New Zealand, legitimised Bainimarama’s governments. They have supported coups in Fiji as long as the resulting regime lined up with their imperialist interests.

Fiji’s administrations, resting directly on the military, have all been authoritarian and anti-working class. The imposition of inequality and social misery—28 percent of the population lives below the poverty line—has been accompanied by harsh austerity measures, along with intimidation of opposition parties, repressive laws, media restrictions and rampant violence by the police and military.

Opposition by workers is ruthlessly suppressed. In March 2019 a stoppage by 33 air traffic controllers at Fiji Airports was declared unlawful. Shortly afterwards, the government banned two May Day protests and arrested over 30 workers and trade union officials, accusing them of breaches of “public order.” They included protesting workers who had been sacked and locked out by the Fiji Water Authority.

The deepening economic and social crisis of the past two years has undermined Bainimarama’s support. A COVID outbreak that began in April 2021 quickly spread, rising to 3,306 active cases in just eight weeks. For a considerable period, the country’s vaccination program proved inadequate and the health system faced collapse. Bainimarama repeatedly refused to implement a nationwide lockdown to control the escalating numbers, saying it would “destroy” the economy.

The pandemic sharply exacerbated the country’s social disaster. Fiji’s unemployment rate, which hovered around 6 percent before COVID hit, increased to 35 percent. The tourism industry, the main foreign exchange earner, collapsed with the loss of 100,000 jobs. Half the country’s 880,000 population experienced extreme financial hardship and food shortages.

According to the Economy Ministry’s Pre-election Economic and Fiscal Update, the COVID pandemic and a series of natural disasters had “devastating impacts” on the economy, jobs, public finance and social conditions. Fiji recorded its largest-ever economic contraction of 17.2 percent in 2020 with a further 4.1 percent contraction for 2021. Total debt is 88.6 percent of GDP. In line with global trends, Fiji now faces escalating inflation, forecast to hit 5 percent by the end of the year.

Bainimarama seized on the crisis to tighten his rule. Amid emerging protests, nine opposition MPs were arrested after criticizing a government land bill, while the foreign-born vice-chancellor of the University of the South Pacific was summarily deported for exposing corruption in the university’s FFP-linked administration.

The coming election is again shaping as a contest between two former coup leaders and military strong men. In 2018, Bainimarama’s main challenger was SODELPA, led by Sitiveni Rabuka, the instigator of two military coups in 1987, and prime minister following the 1992 election. Rabuka now leads a new party, the People’s Alliance (PA).

Rabuka is a former chair of the Great Council of Chiefs—which Bainimarama has since dissolved—and advocates for the traditional privileges of indigenous Fijian landholders. This has involved stirring up chauvinist politics aimed at the minority Indian population.

Under the proportional electoral system, it is possible that no party will get 50 percent of the vote. Bainimarama could well refuse to quit. The anti-democratic 2013 constitution, which empowers the military forces “to ensure at all times the security, defence, and well-being of Fiji and all Fijians,” could even be triggered, initiating yet another military intervention.

Washington and Canberra are not beyond playing a role. Fiji is pivotal in the escalating US-led geo-strategic confrontations in the Pacific against China. As chair of the Pacific Islands Forum, Bainimarama was instrumental in arranging a presentation by US Vice President Kamala Harris to the organisation’s summit in July, from which China had been excluded.

Harris used the speech to announce an expansion of US diplomatic and financial presence in the Pacific, including three new embassies. With Bainimarama emerging as a key ally, signing military agreements with both Australia and New Zealand and supporting the US over the Ukraine, Washington has earmarked Fiji as one of the main “hubs” of its upgraded engagement in the region.

German corporations use economic crisis to impose mass layoffs

Gregor Link

With the explosion of energy and commodity prices, an economic crisis is developing in Germany unprecedented since the end of World War II. It is the price that the working class is being asked to pay for the economic war being waged against Russia. It has been systematically provoked by the German ruling class and the European Union.

While German banks are profiting from a government credit glut, and the big energy and auto companies report record profits, small and medium-sized business are being driven into insolvency en masse and tens of thousands of workers are being laid off.

A detailed report in news weekly Der Spiegel speaks of a “systemic collapse” and quotes economists from the Kiel Institute for the World Economy (IfW), who most recently had to revise their growth forecasts for the coming year downward by four percentage points. The IfW researchers warn of a “massive recession” and put the additional national costs for energy imports at €123 billion this year and €136 billion next year. This would mean GDP shrinking by up to 1.4 percent.

In an interview with Der Spiegel, the Institute for Economic Research (Ifo) in Munich predicts inflation rates of up to 11 percent for the first months of 2023. The researchers noted that wage increases and the German government’s recently approved third “relief package” would “not compensate for this at all.” According to Der Spiegel, “Citizens are losing more purchasing power than at any time since modern national accounts began in 1970,” adding, “The energy cost shock is more severe than in the two oil crises. Natural gas currently costs five times as much wholesale in Europe as it did a year ago.”

To protect owners’ and shareholders’ profit incomes, companies are trying to pass on the price increases to consumers, making workers pay twice--even though they are already forced to pay higher electricity and gas bills as domestic consumers. Many companies are brazenly using the high energy prices as an excuse to pocket government funds and carry out restructuring at workers’ expense through mass layoffs and insolvency funds.

According to a survey by the Federation of German Industries (BDI), more than one in three small and medium-sized companies sees its existence at risk—an increase of 50 percent compared to February. In August alone, the number of insolvencies among joint-stock companies and partnerships, mostly medium-sized companies, grew by a quarter compared to the previous year. For next October, economists at the Leibniz Institute for Economic Research predict a one-third increase over 2021. Increased energy costs and inflation are not even reflected in this forecast.

Among small and medium-sized enterprises, 90 percent said they were facing a “strong” (58 percent) or “existential” (34 percent) challenge. 71 percent of all companies surveyed cited delivery problems and delays, and almost one in ten companies in Germany have currently curtailed or interrupted production. Industrial jobs account for 40 percent of those affected by insolvencies.

Energy-intensive companies, such as paper manufacturers, fertilizer producers and steel producers, are trying to pass high electricity and gas prices “down the line” and pocket government funds. For example, hygiene paper manufacturer Hakle—which has filed for self-administered insolvency—announced a “tough restructuring program” to “make much-needed adjustments to its business model possible.”

The century-old company, which consumes 60,000 megawatt-hours of natural gas and 40,000 megawatt-hours of electricity annually at its Düsseldorf plant alone, employs 225 people, whose situation will be uncertain from December at the latest. Hakle’s competitor Fripa, which consumes around 300,000 megawatt hours a year, employs 450 workers and reported to broadcaster Bayrischer Rundfunk a “very threatening” situation.

SKW Piesteritz, Central Europe’s largest fertilizer producer, completely halted production for more than three weeks, threatened all 860 employees with short-time working and demanded “massive support” from government officials. The diesel engine additive AdBlue produced by SKW is a urea product that is indispensable for modern diesel engines and is consumed daily in around 800,000 trucks in Germany.

Following this show of force, an SKW spokesman said Tuesday that they would restart one of the two plants but would not resume production until officials “send a reliable signal” and exempted the company from the gas surcharge. SKW produces urea and ammonia and competes in part with industry giant BASF, which had already reduced ammonia production last year due to high gas prices.

Speaking to Der Spiegel, the Georgsmarienhütte Group of Companies (GMH), which has 21 sites with its own foundries and forges and employs 6,000 people, threatened to raise steel prices by 50 percent, otherwise “energy-intensive industry in Germany will not survive.”

Rival ArcelorMittal recently announced that it would shut down two production plants in Hamburg and Bremen until further notice. In addition to the “exorbitant rise in energy prices,” there was “weak market demand,” the corporation said. Last week, the world’s second-largest steelmaker had already initially put all 500 workers at the plant in the port of Hamburg on short-time working. At the time, the company had given assurances that it intended to continue essential processes. Now, short-time working will also be introduced at production sites in Duisburg and Eisenhüttenstadt.

Overall, the German Engineering Federation (VDMA) forecasts a two percent decline in production in 2023, following a 14 percent drop in new orders in July.

Food production has also been hit hard by skyrocketing energy prices. The Franconian bakery chain Goldjunge, with 26 branches and 300 employees, had to file for insolvency at the end of August. Cologne-based bakery Schlechtrimen, with 40 long-standing employees, also recently announced the closure of its operations after flour and margarine prices doubled and monthly energy costs rose by €100,000.

The situation is also dire for suppliers to the automotive industry. For example, BIA, which produces chrome-plated plastic components used by all major car manufacturers in Europe, announced on Thursday that it would close its plant at Forst, meaning 150 workers will lose their jobs by the end of the year. The bankruptcy of automotive supplier Dr. Schneider affects all 2,000 employees, who are forced to draw insolvency benefits as part of an ongoing reorganization plan. Vitesco, which supplies drivetrain and power-train technologies, is cutting 810 jobs at its Nuremberg site over the next few years.

Carl Leipold, which produces around one billion precision turned parts a year, filed for insolvency earlier this month. According to management, the reason was “exploding energy costs as well as price increases for operating and auxiliary materials, which could only partly be passed on to customers and with a time lag.” This affects 300 employees in Germany.

Last week, the German Association of the Automotive Industry (VDA) revised its market forecast for Germany downward, from the previous three percent growth to minus six percent. VDA President Hildegard Müller complained that “our economic model is in question” and that only three out of five car manufacturers in Germany were able to “pass on energy costs to their customers.”

The automotive industry’s price increases are in fact part of an explicit “luxury strategy” designed to bring the industry astronomical profits and “EBIT [earnings before interest and taxes] margins of 35 percent per year.” Under the slogan “Luxury instead of volume, make hay with [luxury brand] Maybach,” financial websites report manufacturers such as Mercedes-Benz and its subsidiaries have long been profiting from higher prices.

For example, amid growing quarterly profits, Daimler Truck recently announced it would relocate 1,000 jobs in Mannheim to the Czech Republic and lay off 3,600 workers in Brazil. The company will not renew the temporary contracts of 1,400 workers at the São Bernardo plant from December and will lay off 2,200 more. In Germany, 600 current jobs are also to be cut at Evobus’ Neu-Ulm site. Daimler Trucks’ adjusted operating profit grew 15 percent to €1.01 billion in the latest quarter.

Carmaker Opel, part of the Stellantis Group, plans to cut up to 1,000 more jobs in Germany. Labour Director Ralph Wangemann announced Thursday in Rüsselsheim that the company plans to continue existing programs on partial retirement, early retirement, or severance payments, which could mean 1,000 jobs could be eliminated by the end of the year. Stellantis raked in record profits of €8 billion in the first half of 2022 and plans to become the most profitable car company in Europe.

Stellantis’ rival Volkswagen announced Friday it would close a distribution centre near Kassel by the end of 2024, affecting 300 employees. A crisis staff team at the VW group, DerSpiegel reports, “are also discussing with the works council how far down they may lower the temperature on factory floors to save on heating gas.” Volkswagen reported an operating profit of €4.7 billion in the second quarter.

Overall, the operating profits of the 16 largest international car companies in 2021 rose 168 percent year-on-year to a total of around €134 billion, despite the semiconductor crisis.

In the retail sector, shoe vendors Ludwig Görtz GmbH filed for insolvency on September 6, 2022. The company filed for protective bankruptcy for the parent company, as well as self-administered insolvency proceedings for its store and logistics subsidiaries. The insolvency affects 160 stores and 1,800 employees, who are to receive their salaries from the Federal Employment Agency until December. Addressing creditors, Görtz CEO Frank Revermann said they could “expect a successful future after the company reorganization.”

The Galeria Karstadt Kaufhof (GKK) retail group, owned by Austrian real estate multi-billionaire René Benko, has already gone through insolvency and has since been propped up by the federal government to the tune of €700 million. But as Der Spiegel reports, “reserves” are “melting away” as customers are running out of cash and energy costs at branches have increased tenfold in some cases in recent months.

“Consumer sentiment is as bad as never before in the history of the Federal Republic,” the news magazine notes. Millions of people were having to put purchases on hold and massively restrict consumption. The Ifo Institute warns that “private consumption is likely to fail as an economic engine in Germany for the rest of the year.” Meanwhile, according to the daily Süddeutsche Zeitung, the business climate in the cyclical construction industry was “cooling as sharply as it last did in the financial crisis of 2008.”

Triggered by the growing doubts of venture capitalists, unprecedented mass layoffs are now taking place even in the previously booming start-up and platform branches. A report by Business Insider cites planned and imminent layoffs of more than 20 percent of all employees in some cases—including at food delivery services Gorillas (300), Getir (4,480) and Zapp (200 to 300), payment services Klarna (700), Sumup (100) and Nuri (45), and 180 at Tier Mobility.

However, according to a report in Der Spiegel, there was a “gold-rush atmosphere” among the assembled managers at the world’s largest energy industry trade fair, Gastech, this year. European energy company Uniper—which received €15 billion worth of state aid from the German government and has applied for four billion more—sponsored the fair with €175,000 and financed a “prestigious dinner” in a posh Milan villa for another €175,000. Business Insider magazine quotes Uniper CEO Klaus-Dieter Maubach from a now-deleted tweet: “We definitely have a good crisis, so let’s not miss it!”

Putin, Xi meet as Shanghai Cooperation Organization summit opens in Uzbekistan

Alex Lantier

Russian President Vladimir Putin and Chinese President Xi Jinping met yesterday at the opening of a two-day security summit of the Shanghai Cooperation Organization (SCO) in the Uzbek city of Samarkand.

Chinese President Xi Jinping, left, and Russian President Vladimir Putin pose for a photo on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Samarkand, Uzbekistan, Thursday, Sept. 15, 2022. [AP Photo/Alexandr Demyanchuk]

The SCO is a Eurasian regional organization founded in 2001 by the “Shanghai Five”: China, Russia, and former Soviet Central Asian republics of Kazakhstan, Kyrgyzstan and Tajikistan. They have since been joined by India, Pakistan and Uzbekistan. Afghanistan, Belarus and Mongolia have “observer status” in the SCO, which also has Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey as “dialogue partners.” SCO member states account for one-quarter of the earth’s surface, 30 percent of the world economy and 40 percent of its population.

The summit is however overshadowed by the US-NATO war with Russia in Ukraine, combined with growing US threats against China over Taiwan. A week before the Samarkand summit began, Russian troops suffered a devastating defeat at the hands of Ukrainian troops trained, armed and coordinated by the NATO powers.

Speaking to Xi, Putin acknowledged Chinese concerns with the Kremlin’s invasion of Ukraine and the debacle suffered by the Russian army in Kharkov. “We highly value the balanced position of our Chinese friends when it comes to the Ukraine crisis,” Putin said. “We understand your questions and concern about this. During today’s meeting, we will of course explain our position.”

Putin also explicitly condemned US moves to arm Taiwan and, repudiating the “One China” principle that Washington adopted in its 1972 Shanghai Communiqué, press Taiwan to formally declare independence and break with Beijing. “We intend to firmly adhere to the principle of ‘One China,’” Putin said. “We condemn provocations by the United States and their satellites in the Taiwan Strait.”

Putin asserted that the “Moscow-Beijing tandem” plays a “key role” in ensuring global stability and indirectly criticized Washington, declaring: “Attempts to create a unipolar world have recently acquired an absolutely ugly form and are completely unacceptable.”

Calling Putin an “old friend,” Xi replied: “China is willing to make efforts with Russia to assume the role of great powers, and play a guiding role to inject stability and positive energy into a world rocked by chaos.”

In a press release, China’s Ministry of Foreign Affairs said: “President Xi emphasized that China will work with Russia to extend strong mutual support on issues concerning each other’s core interests, and deepen practical cooperation in trade, agriculture, connectivity and other areas.”

Putin’s public acknowledgment of Chinese concerns over the Ukraine war point to the enormous tensions and political crisis inside the SCO as Washington and its NATO allies intensify operations against Russia and China. During the war in Ukraine, Beijing has pursued a delicate balancing act. It rejected NATO calls to impose sanctions on Russia but, at the same time, took no overt action in support of Moscow that could provide a pretext for NATO sanctions against China.

Last week, Li Zhuanshu, the president of the Standing Committee of China’s National Popular Assembly and number three official in the Chinese state hierarchy, traveled to Russia and made a more direct statement of support for Moscow, declaring: “Just like the Ukraine issue now, the United States and NATO had pushed straight to Russia’s doorsteps. This involves Russia’s national security and the safety of its people’s lives. In light of this, China understands that Russia needed to do what is appropriate and is giving coordinated support on multiple fronts.”

Clearly, however, concerns are mounting behind the scenes in Beijing that the Kremlin has no solution to avert an escalation and end its war with NATO in Ukraine.

The SCO, and its predecessor, the “Shanghai Five” association formed in 1996, has developed under the shadow of imperialism and the Stalinist bureaucracies’ restoration of capitalism and the dissolution of the Soviet Union in 1991. The Soviet bureaucracy’s final act of treachery against the Soviet workers and socialism threw Eurasia open to imperialist military intervention. After the SCO’s foundation, Washington seized on the September 11 attacks to occupy Afghanistan and set up military bases in Central Asian countries.

This unleashed a bloody imperialist drive to dominate strategically vital areas of Central Asia and the Middle East and plunder their resources. US and NATO forces have since intervened militarily in Iraq, Pakistan, Libya, Syria and Ukraine, where in 2014 the NATO powers backed a far-right putsch in Kiev that split Ukraine and set into motion the current war. Collectively, these wars cost millions of lives and turned tens of millions into refugees.

Deepening US economic decline and military defeats in Afghanistan and Iraq, coupled with China’s growing economic influence in Eurasia, has brought the struggle over Eurasia to a new peak of intensity. In this, military and financial considerations are inseparably linked. NATO’s waging of war against Russia in Ukraine is in the final analysis, like the world wars of the 20th century, the product of the insoluble contradiction between global economy and the capitalist nation-state system.

A September 14 editorial in China’s state-run Global Times titled “Non-dollar settlement in energy trade will break US hegemony” called on Russia and China to “step up cooperation to break the US dollar’s dominance in the energy market.” It pointed to the devastating inflationary effects of the Ukraine war and the current surge in prices for energy, which is traded in dollars, combined in the dollar’s rise in value against other currencies as the US Federal Reserve raises interest rates.

The Global Times wrote, “A strong dollar means energy products will become more expensive in terms of other currencies. When energy and raw material prices rise, the prices of other products will go up, leading to high inflation globally. … The reason why the US can, time and again, export its own inflation crisis caused by its previous monetary easing policy to the world is mainly because the dollar still holds the dominant position in the global foreign exchange market, reserve assets, trade settlement and other fields.”

It called for using the SCO as a forum to develop trade in oil and gas in non-dollar currencies. It noted that China buys Russian oil and gas with a mixture of Chinese yuan and Russian rubles, while India has paid for Russian energy in dirhams, the currency of the United Arab Emirates.

US imperialism is bitterly hostile to such a policy. In 2019, Denmark’s Saxo Bank calculated that a shift of intra-Eurasian trade out of the US dollar could lead the dollar to collapse, losing 30 percent of its value against gold.

A significant event at yesterday’s summit in Samarkand was the announcement that Iran, previously an SCO “observer” state, will formally join the SCO next year. Iran has faced two decades of US war threats and crippling sanctions, as Washington cut it out of all dollar-denominated financial transactions. Last year, it signed a 25-year military alliance with China and held naval exercises with Russian and Chinese warships in the Indian Ocean.

“The relationship between countries that are sanctioned by the US, such as Iran, Russia or other countries, can overcome many problems and issues and make them stronger,” Iranian President Ebrahim Raisi said while meeting Putin in Samarkand. “The Americans think whichever country they impose sanctions on, it will be stopped. Their perception is a wrong one.”

The various capitalist regimes in the SCO are however neither willing nor able to wage a consistent struggle against imperialism or resolve the bitter legacy of the Stalinist dissolution of the Soviet Union. The case of Putin, who launched his ill-fated intervention in Ukraine while denouncing the Bolshevik revolutionaries who founded the Soviet Union for making too many concessions to Ukrainians, is the starkest illustration of this point.

It is impossible to unify Eurasia against imperialism under the leadership of capitalist regimes. Indeed, shortly before the Samarkand summit, two former Soviet republics and SCO observer states, Armenia and Azerbaijan, plunged back into war over the disputed Nagorno-Karabakh region. It is unclear, moreover, whether Xi will meet Indian Prime Minister Narendra Modi, after clashes in 2020 along the unresolved Sino-Indian border inherited from British rule over India.

Irish government moves nearer NATO and war with Russia

Dermot Quinn & Steve James

The Irish coalition government made up of Fianna Fáil, Fine Gael, and the Green Party has seized on the humanitarian crisis generated by the Russia-Ukraine war to intensify efforts to abandon Ireland’s formal neutrality and lead the country into the imperialist war fighting alliance, NATO and related European Union (EU) military structures.

Over 47,000 Ukrainian refugees have now arrived in Ireland. This has emboldened mainstream media efforts to echo the remarks of Ireland’s former Taoiseach and deputy premier Leo Varadkar, who branded Russian premier Vladimir Putin “the Hitler of the 21st century'”. A wave of anti-Russian hysteria has been whipped up, sanctioned by the government and encouraged and egged on by the state broadcasting service RTE.

In April, US puppet and Ukrainian President Volodymyr Zelensky told Ireland’s Dáil (parliament), “Although you are a neutral country, you have not remained neutral to the disaster and to the mishaps that Russia has brought to Ukraine.”

Address by the President of Ukraine, Volodymyr Zelenskyy, at a Joint Sitting of Dáil & Seanad Éireann in Leinster House on April 6, 2022 [Photo by Houses of the Oireachtas/Flickr / CC BY 4.0]

There has been a backlash from right-wing pro-NATO members of the Dáil and media over remarks made by Sabina Higgins, the wife of President Michael D. Higgins, who wrote a letter to the Irish Times at the beginning of August calling for peace talks between Ukraine and Russia. Higgins’ letter enraged those leading the pro-NATO campaign, particularly as her proposal for talks had avoided the requisite anti-Russian rhetoric.

The move to formally abandon neutrality coincides with decisions by Sweden and Finland to join NATO. The Irish shift is part of the massive escalation in efforts by the US and European imperialist powers to encircle Russia and accelerate the drive to all-out war. The Irish ruling elite want to show just how loyal they are to their imperialist allies.

This is in defiance of overwhelming opposition from working people. A recent Irish Times/lpsos poll showed that 66 percent of Irish people do not want any change in Ireland’s current position. Only 24 percent supported change, while 11 percent did not know. Ireland’s currently policy precludes the country from joining any military alliance and requires a United Nations Security Council resolution for Irish troops to be committed abroad.

Origins of Irish neutrality

Popular support for military neutrality is bound up with hostility among Irish workers to the horrors of imperialism. By contrast, the Irish ruling class has for decades employed neutrality as a tactic to advance its own class interests by attempting to use one or other imperialist power as a counterweight to Britain.

The Irish Free State (later the Republic of Ireland) was founded one hundred years ago in 1922 based on crushing all working class demands that went beyond the interests of the Irish bourgeois nationalists. These later founded Fianna Fáil and Fine Gael, still the two main bourgeois parties.

The intention of those who took control of the 26-county state in the South of Ireland, after bloody partition by Britain, and having suppressed the working class, was to keep the South of Ireland subordinate to imperialist interests. The Irish Free State came into existence as a mechanism by which the British ruling class could rely on the weak Irish bourgeoisie to prevent opposition to British domination of the island spilling over into a struggle for socialism in Ireland and Britain itself.

The 1922 Constitution of the Irish Free State stated that “Save in the case of actual invasion, the Irish Free State shall not be committed to active participation in any war without the assent of parliament”.

The Free State remained a dominion of the British Commonwealth with the UK remaining in control of marine defence as well as three naval bases known as the “Treaty Ports”—at Berehaven, Loch Swilly and Spike Island.

The Treaty Ports were handed back to the Irish government as part of a 1938 settlement. This followed five years of the Anglo-Irish Economic War in which Eamonn de Valera’s new Fianna Fáil government implemented, at great social cost, protectionist measures against Britain designed to foster Irish capitalism. In consequence, the Irish government remained at least nominally neutral during World War Two, although neutrality in practice had a pro-British bias.

British wartime Prime Minister Winston Churchill was urged by Northern Ireland Prime Minister Lord Craigavon to invade the South. Churchill in the end relied on agreed military overflights of Donegal to Northern Ireland during the “Emergency” of world war. Close co-operation with Britain against a possible German invasion was also prepared.

There were limits, however. In 1940 a British delegation floated the possibility of ending partition if the Irish government would fully support the British war effort. De Valera refused, seeking to advance Irish capitalism by balancing between the imperialist combatants. Relations were maintained with Japan and Nazi Germany, while close relations with the US also served as a growing counterweight to British influence.

Ireland eventually joined the United Nations in 1955, having been blocked by the Soviet Union in 1945, although Ireland refused to join NATO due to British membership of the anti-Soviet alliance. The Irish government sought an alliance with the US outside the confines of NATO, but this was refused by Washington. Cooperation was nevertheless continually deepened with the US on security matters.

Ireland’s formal neutrality, and history of brutal national and class oppression, was used by the US and other powers to obscure the barbaric aims of imperialism, particularly in Africa. Between 1960 and 1964, for example, over 6,000 Irish soldiers served in the Congo, in a brutal war following Congolese independence from Belgian colonialism. Subsequent UN deployments saw Irish troops dispatched to many of the world’s poorest countries, including Haiti and Angola, seeking to secure imperialist interests.

By the 1960s, Ireland had abandoned its protectionist experiments, reducing tariff barriers on trade and opening up the economy to US capital and investment. The South became a hub for multinational companies attracted by low taxes and compliant unions. The integration of the ruling elite as junior partners of the imperialists was accelerated by accession to the European Community in 1973. Today more than a thousand large global American companies have operations in Ireland, paying one of the lowest corporation tax rates in Europe at 12.5 percent, and enjoying access to the EU’s huge single market.

Partnership for war

Irish integration into Europe also drew Ireland into European and NATO mechanisms. In 1999 Ireland was accepted into NATO’s Partnership for Peace programme (PfP), which serves as a waiting room for NATO membership. Candidate countries are set targets in terms of military organisation, spending and equipment. As of July 2022, Ireland was deemed to have 15 of 27 set goals outstanding.

In 2003, to stress its loyalty to the US, the Fianna Fáil government supported the invasion and occupation of Iraq, assisting US “shock and awe” bombing by offering Shannon Airport in the west of Ireland as a hub and refueling depot. The invasion resulted in the death of more than a million people and the destruction of an entire society.

Shannon Airport terminal and control tower [Photo by Joseph Mischyshyn / CC BY-SA 4.0]

By 2006 the airport became one of the main locations for “rendition flights” carrying prisoners held by the CIA to countries where they were subsequently tortured. Shannon is currently used to refuel daily arms flights to Ukraine.

By June this year, the Irish government was also considering joining the joint NATO/EU hybrid and cyber warfare thinktank based in Helsinki, Finland, and has already joined the NATO Co-operative Cyber Defence Centre of Excellence in Tallinn, Estonia.

Taoiseach Martin has been floating plans to avoid a referendum on NATO membership, which would stand a high chance of losing. In June, Martin declared, “We need to reflect on military non-alignment in Ireland and our military neutrality. We are not politically neutral.” He continued, “We don’t need a referendum to join NATO. That’s a policy decision of government.”

Ireland is also integrating its forces into the EU’s own military apparatus. In 2006, Willie O’Dea, then the Minister of Defence, announced that Ireland would seek to join European Union battle groups. It has subsequently participated in a succession of battle groups involving up to 1,500 troops.

In 2017, the Dáil voted to join the European Union’s Permanent Structured Co-operation (PESCO) Agreement, made up of 25 of the EU’s 27 member states. Thus far, the country has only participated in one of PESCO’s 60 projects. In June, however, the Dáil voted to participate in four more, including work against cyber threats, medical training, disaster relief—“both within and outside EU territory”—and sea mine clearance.

Also driving the ruling elite in Ireland towards NATO militarism is the very real threat from the working class, which has seen living standards plummet and poverty increase.

More than 781,794 people are experiencing deprivation in Ireland, with 660,000 people now living in poverty, of which 210,000 are children. Over 133,000 people living in poverty are in employment. According to the latest data produced by Eurostat, energy prices have risen by 39.1 percent in the past twelve months, driving overall yearly price inflation to 7.3 percent.

The housing and rental crisis has extended its shadow over the whole country, particularly in larger towns and cities. The latest figures released by the Department of Housing show that the number of homeless people increased in June to 10,492, up more than a quarter on the same period last year. The number of homeless families has now increased to 1,385 and there are over 3,000 children homeless. The NATO-Russian war crisis serves to divert class tensions against an “external foe.”

William Ruto sworn in as Kenyan President as IMF demands austerity

Kipchumba Ochieng

William Ruto has been sworn as Kenya’s fifth president since independence in 1963. He is set to impose International Monetary Fund (IMF) austerity measures and wage class war against workers and the rural masses, as prices soar.

Kenya's President-elect William Ruto addresses the media at his official residence of the deputy president in the Karen area of Nairobi, Kenya Wednesday, Aug. 17, 2022. (AP Photo/Mosa'ab Elshamy)

On Tuesday, Ruto took his oath of office in Nairobi’s Kasarani Stadium a week after his election was upheld by the Supreme Court. Ruto’s electoral rival, Raila Odinga, had alleged mass electoral fraud and sought to annul the August 9 election’s result that gave Ruto 50.5 percent of the vote against Odinga’s 48.8 percent. The court unanimously dismissed the appeal.

Ruto won the elections by styling himself as an outsider and a “hustler” against Kenya’s ruling “dynasties” combined with anti-Chinese demagogy. Bourgeois papers presented him as the son of “a peasant farmer who went barefoot and sold chickens for school fees” (in words of The Star) to become Kenya’s fifth president, fighting the Kenyatta and Odinga political dynasties.

At the inauguration, Ruto pledged a Hustler Fund to boost business, “dedicated to the capitalisation of micro, small and medium-sized enterprises […] to make credit available on affordable terms that do not require collateral;” a Judiciary Fund to increase the number of small claims courts; to appoint six judges rejected by former president Uhuru Kenyatta over alleged integrity issues; to introduce new fertiliser prices; measures to increase police autonomy from the executive; and measures to “make fertiliser, good quality seeds and other agricultural inputs affordable and available.”

Ruto has nothing to offer to working people. The deepening economic, social and military crisis underway globally has no solution within the borders of Kenya. Confronting an upsurge of the class struggle, amid growing concerns about food insecurity, unemployment, war, and surging prices, Ruto will turn to austerity, police-state measures, his imperialist backers in Washington and London, while whipping up communalism and Christian bigotry.

Kenya is one of the highest countries on the list for civil unrest according to Verisk Maplecroft, a UK-based risk consulting and intelligence firm. Last May and July, rising food costs spurred protests in Nairobi under the hashtags #LowerFoodPrices and #Njaa-Revolution (hunger revolution in Swahili). It raised the spectre of Sri Lanka, where President Gotabhaya Rajapakse fled a country rocked by protests over soaring costs of living and IMF-imposed austerity.

Inequality in Kenya is among of the highest worldwide. According to Oxfam, less than 0.1 percent of the population (8,300 people), among which is Ruto himself, own more wealth than the bottom 99.9 percent (more than 44 million people). Fully 7,500 new millionaires are expected to be created in the next decade.

On the other hand, workers, especially youth, face mass unemployment. More than three-quarters of Kenya’s 50 million people are aged under 35, yet youth unemployment is 39 percent.

Kenya’s cost of living, driven by the US-NATO war on Russia in the Ukraine, are soaring, climbing to a five-year high of 8.5 percent last month. The Kenya National Bureau of Statistics (KNBS) reported that prices of maize flower, sugar and rice rose 4.7 percent, 4.6 percent and 2.9 percent, respectively. Market surveys show that maize and wheat flour, upon which millions of Kenyans depend, have actually risen by 67 percent over the last three months.

Tuesday’s speeches already indicate the pretexts the new executive will use to make workers pay for the global economic crisis. Ruto claimed that “clearly, we are living beyond our means.” Ruto’s Deputy President, Rigathi Gachagua declared: “The truth of the matter is that we have inherited a dilapidated economy which almost facing shut down. We have a huge task to liberate this country and bring it back to where Kibaki left it,” that is, a decade ago.

Gachuga was silent on the fact that Ruto had been deputy president since Kibaki left office.

Ruto will ruthlessly impose the IMF’s agenda. The IMF has classified Kenya’s $70 billion debt as high-risk, with debt at 70 percent of the GDP and consuming 63 percent of tax collections. In April 2021, at the height of the COVID-19 pandemic, it granted a 38-month $2.34 billion loan.

Obeying the IMF, Ruto has pledged to eliminate subsidies on unga (maize flour) and fuel, whose prices are expected to soar. From October, the Kenya Revenue Authority will impose a 6.3 percent tax hike on excisable goods and services. There an ongoing hiring freeze in the public sector.

The IMF is demanding Ruto implement a national tax policy, which would impact previously untaxed sectors like informal business and agriculture and raise prices for staples like flour and maize. It is calling to raise sales taxes on petroleum products from 8 to 12 percent, that all goods should be taxed at 16 percent with a minimum rate of at least 12 percent. Civil servants also face cuts, as the IMF calls to slash the public sector wage bill.

Despite Ruto’s pledge to expand democracy, stating, “I will work with all Kenyans irrespective of who they voted for,” his track record says otherwise.

Ruto was mentored by Kenya’s pro-Western dictator Daniel Arap Moi, under whom he became MP for Eldoret North (1998-2013) and Home Affairs minister (2002). Ruling Kenya from the death of its first president, Jomo Kenyatta, in 1978 until 2002, Moi tortured and killed left-wing opponents while amassing a fortune of over $3 billion. He implemented IMF austerity, devastating living standards of the workers and rural masses.

Ruto has a long record of whipping up communalism, the Kenyan elites’ traditional weapon to divide and rule the working and oppressed masses. His political career started 30 years ago as an organising secretary of the Youth for KANU 1992 (YK’92) that lobbied for Moi’s re-election in 1992 in Kenya’s first multi-party elections since independence.

Well-funded and well-armed, Moi used Ruto’s YK’92 to whip up ethnic violence against Kikuyu ethnic groups in the Rift Valley Province. It is estimated that over 600 people were killed and 75,000 displaced in post-election violence.

In the 2007–2008 Kenyan electoral crisis, Ruto organised, paid and armed militias from his ethnic group (Kalenjin) to attack Kikuyus. At least 1,200 people were killed and 600,000 forced to flee their homes amid a rampage of rival militias of Uhuru Kenyatta’s Kikuyu and Ruto’s Kalenjin tribes, wielding machetes, knives, and bows and arrows.

Local broadcasters critical of Ruto were restricted in their coverage of Ruto’s inauguration. Ruto is expected to attack homosexuals’ rights and abortion, having opposed—with church backing—the current constitutional provision authorising abortion if there is a risk to the mother’s health.

In foreign policy, Ruto, who pledged to deport Chinese workers during the campaign to whip up anti-China sentiment, is expected to closer align himself with the Washington and London. Ruto has already met two of US President Joe Biden’s anti-China and anti-Russia hawks, US Senator Chris Coons and US Trade Representative Katherine Tai, who attended Ruto’s inauguration.

Coons is a leading anti-China hawk in Washington, having promoted US House Speaker Nancy Pelosi’s provocative visit to Taiwan. He also called to send US troops to fight Russia in Ukraine, threatening all-out nuclear Armageddon.

By sending anti-China and anti-Russian hawks to Nairobi, Washington is sending a message that Ruto must implement the IMF diktat and submit to the US offensive against Beijing and Moscow.

Warnings of financial turbulence amid rising workers’ struggles

Nick Beams

The latest US inflation data and the certainty that the Federal Reserve will continue to lift interest rates and tighten its monetary policy, all combined with a rising US dollar, is sending tremors through the global financial system.

As the Federal Reserve announces a rate change, traders work on the floor at the New York Stock Exchange in New York, Wednesday, June 15, 2022. (AP Photo/Seth Wenig)

Markets around the world fell yesterday on the back of Tuesday’s slide on Wall Street—the largest in two years.

This rise in the dollar’s value as a result of the Fed’s interest rate hikes is causing concern for financial authorities and governments in Asia as their currencies fall. Bloomberg has reported that the Japanese government is said to have asked banks for an indicative price for the value of the yen at which it could intervene to try to stabilise the currency.

The yen has hit a 24-year low against the dollar and the Japanese finance minister Shunichi Suzuki has said the government would not rule out an intervention in foreign exchange markets. The South Korean won has fallen along with the Thai baht, the Indonesian rupiah, the Philippine peso and the Malaysian ringgit.

One of the major concerns of the governments of the region is that the decline in the value of their currencies against the US dollar adds further fuel to the inflation fire which has already seen the eruption of mass protests in Indonesia earlier this month.

The other worry is that the fall in currency values sets off a financial crisis as took place in the Asian financial crisis of 1997, sparked by a collapse in the value of the Thai baht.

In the US, the latest data make clear price hikes are not abating. The key issue in ruling circles is how far and how fast interest rates must be raised to suppress the growing movement of the working class for wage increases to compensate for the highest inflation in four decades.

An article in the Financial Times (FT) quoted Tim Duy at SGH Macro Advisors, which provides research for hedge funds, who made clear the central bank had much further to go.

“We’re not seeing enough of the results of monetary tightening showing up in the economy to think that the Fed’s job is anywhere near done,” he said.

The article noted that “economists’ primary concern is that expectation of future inflation could spiral out of control, setting off a feedback loop whereby workers demand higher wages.”

Former treasury secretary Lawrence Summers, who has called for an unemployment rate of 5-6 percent for several years or a 10 percent unemployment rate for at least a year, is pressing ahead with this demand.

In his latest intervention, in a comment on Twitter, he said that “it has seemed self evident to me for some time now that a 75 basis points move in September is appropriate. And, if I had to choose between 100 basis points in September and 50 basis points I would choose a 100 basis points move to reinforce credibility.”

What is meant by “credibility” is that the Fed displays its unrelenting determination to raise interest rates to a level sufficient to bring about a recession so that wage demands are pushed back under conditions of sweeping job losses.

But the Fed’s drive against the working class via its monetary tightening policy is raising concerns about its effects on the stability of financial markets.

Besides the impact of interest rate hikes, there is another issue which is rapidly coming into view. This is the consequences of the Fed’s decision to start reducing it $9 trillion holdings of financial assets at the rate of $95 billion a month, a process known as quantitative tightening (QT).

This means that instead of being a buyer in the $25 trillion US Treasury bond market, the Fed becomes a seller.

The concern is this will lead to a liquidity contraction where there is a shrinking pool of buyers for government debt.

This is what took place in the meltdown of financial markets in March 2020 when, at one point, no buyers could be found for Treasury bonds, threatening a collapse of the entire financial system. That was only narrowly averted through a massive intervention by the Fed which doubled its holdings of financial assets to more than $8 trillion.

Despite several inquiries and reports on the meltdown, nothing has been resolved and there is a growing fear that in conditions where liquidity is at its tightest since the early months of 2020 that another crisis could erupt.

Commenting on the effect of QT to the FT, New York University economist Viral Acharya warned that “we could have a problem of liquidity stress in the banking system. And whenever banks are stressed, it usually spreads over to non-banks and Treasury markets and other [funding] markets.”

Acharya was the co-author of a paper with Raghuran Rajan, former governor of the Bank of India, to the Jackson Hole meeting of bankers and financial official at the end of August, that warned of the effect of QT on liquidity.

Rajan has proved to be an insightful observer in the past. When he was an economist at the International Monetary Fund, he presented a paper at the Jackson Hole conclave of 2005 in which he warned that the Fed’s ultra-easy monetary policies were creating the conditions for a financial crisis.

The conclave was conceived as a celebration for the retiring Fed chair and the architect of those policies, Alan Greenspan, and so Rajan was rounded on by all and sundry, particular Summers. But three years later, in September 2008, the global financial crisis erupted.

The Bank of America has warned that Treasury market strains are “arguably… one of the greatest threats to global financial stability today, potentially worse than the housing bubble of 2004–2007,” which was the trigger for the crisis of 2008.

The giant bond trader Pimco has warned that the current structure of the US Treasury market “leaves it vulnerable in times of stress to further bouts of the extreme market price volatility seen in March 2020.”

Articles in the mainstream media as well as comments by economists always involve a mystification of the operations of finance capital. But there is a profound relationship between the gyrations of the financial markets and the struggles of the working class.

Notwithstanding the vast profits accumulated on Wall Street by banks, hedge funds, speculators and investors, the financial system does not create an atom of real wealth. It is a mechanism through which the wealth created by the labour of the working class is siphoned to the upper echelons of society, the top one percent, and their props in the upper reaches of the middle class.

That process is being threatened by the rising movement of the working class in support of wage demands and an end to the increasingly intolerable, exploitative, working conditions imposed over decades. The fear is that this movement threatens to bring down the entire house of financial cards.

This is why in the US, particularly with regard to the struggle of rail workers, in the UK, where the economy has become a cesspit of financial parasitism, and around the world, all the forces of the state, including its financial arm, the central banks, are being mobilised with the support of its bought-and-paid-for servants in the trade union apparatuses to attempt to suppress it.