Royal Mail announces plans to axe 10,000 UK jobs

Tony Robson

Royal Mail announced today that it will axe 10,000 full time jobs, over 6 percent of its 150,000-strong workforce across the UK. The jobs massacre was unveiled by parent group International Services Distribution and will be realised in two tranches, with 5,000 redundancies by March and a total of 10,000 by August 2023.

The company’s plans were announced less than 12 hours after Thursday’s strike by 115,000 postal workers at 1,500 workplaces. It was the sixth national strike since August and the first of 19 more one-day stoppages in the lead up to Christmas.

Pickets at Crieff Delivery Office, October 13, 2022 [Photo: WSWS]

Today’s announcement by Royal Mail is a clear attempt to intimidate postal workers from taking further strike action. The company sought to justify its brutal measure by blaming strikers, saying it expected end of year losses of £350 million, which included “the direct impact of eight days of industrial action.”

Postal workers are fighting Royal Mail plans to turn them into a super-exploited workforce to compete with Amazon and other rivals in the parcel delivery market. The company’s agenda is proceeding under the mantra of ending “legacy benefits”, meaning the terms and conditions won by postal workers in decades of struggle.

Royal Mail is proceeding with its agenda through executive action. But the press release from the Communication Workers Union (CWU) underlines it will not mobilise postal workers against Royal Mail’s declaration of class warfare.

It pays lips service to opposing the carve-up and asset stripping by the company’s financial investors stating, “The announcement is the result of gross mismanagement and a failed business agenda of ending daily deliveries, a wholesale levelling-down of the terms, pay and conditions of postal workers, and turning Royal Mail into a gig economy style parcel courier.”

But the centrepiece of the statement is an appeal for the Board to meet and discuss the union’s “alternative business plan”, framed as one offering greater profitability based on “utilising the competitive edge it has already in its deliveries to 32 million addresses across the country.”

The company’s jobs massacre announcement blows out of the water the empty claims by CWU General Secretary Dave Ward about progress in this week’s reconvened talks with Royal Mail executives. In a CWU video update on Monday’s company talks, Ward had announced, “Things are shifting” and claimed there was “a different feeling in the room.” 

CWU leader Dave Ward speaking at the Enough is Enough rally in London, October 1, 2022 [Photo: WSWS]

The suspicions aired by postal workers on social media about the talks have been fully confirmed. Workers warned they were a ruse by Royal Mail as it seeks to end strikes over the profitable Christmas period, buying time while the Truss government readies new anti-strike legislation to be used against them.

Royal Mail is acting as a corporate dictator on behalf of the financial oligarchy. It cites losses from industrial action, but the company has been on a non-stop looting spree on behalf of shareholders. This includes £400 million in dividends paid out in 2021 and £130 million this year. Profits quadrupled last year to £726 million, fueled by a surge in online buying during the pandemic. After a dip in these record profits by 8 percent this year, to £662 million, Royal Mail chair Keith Williams callously declared that the “pandemic boom” was over.

The response by these pandemic profiteers is that workplace “modernisation”, i.e., the gutting of workers’ terms and conditions, as envisaged in the Pathway to Change (PtC) agreed last year with the CWU, must be accelerated.

Things to get much, much worse for UK workers

Robert Stevens

Rising interest rates, high inflation, and declining wages and welfare benefits will plunge vast numbers of UK workers into desperate poverty.

Thousands are set to lose their homes as due to crushing rises in mortgage rates and resulting rent increases. Close to five million homeowners face staggering increases in their mortgage payments over the next two years. For the first time since 2008, the average two-year fixed mortgage rate soared above 6 percent this month, with a further rise to 6.46 percent this week. UK Finance predicts that a rise in the Bank of England’s own interest rate to 6 percent would add an estimated £445 a month to repayments on a typical £200,000 loan—a staggering £5,340 a year.

Two million people already on variable rate deals will see an immediate increase. Over the next six months around 600,000 mortgages will renewed, resulting in nearly 3,300 households a day being forced to taking on hundreds of pounds a month in extra repayments of face repossessions. Around 2 million mortgages holders coming to the end of a fixed rate deal will have to do the same in the next year.

According to the Royal Bank of Canada, passing on these costs to tenants could lift already record-high rents by £280 a month.

The working class is already under siege. With inflation at a 40-year high of nearly 12.5 percent, grocery inflation is even higher—surging to a record high of 13.9 percent in September. Research by Kantar found that households face an increase of £643 in their annual supermarket spend (an extra £12 a week), taking an annual grocery bill to £5,265 if they continue to buy the same items.

A shopper enters a supermarket in London, January 12, 2021 [AP Photo/Alastair Grant]

Even with the energy bills support announced by the government, the cap for a typical annual household bill still rose from £1,971 to £2,500—double the figure last winter.

Since Chancellor Kwasi Kwarteng unveiled his disastrous mini-budget on September 23, consisting of £45 billion in tax cuts for the richest—based on increased government borrowing—the pound has been threatened with collapse and UK bond prices have tanked as the global money markets moved against the Truss government.

The demands of the financial markets were that any tax-cutting measures had to be paid with deepening austerity, not government borrowing. The run on the pound forced the government to pull one of its tax cuts, the proposed abolishing of the 45 percent highest rate of tax, but this still left a £43 billion black hole.

The markets demanded that Kwarteng immediately spell out what austerity measures he intends to carry out to prevent UK public debt growing ever-larger. He responded by moving forward his “medium-term fiscal plan” statement from November 23 to October 31.

UK Chancellor Kwasi Kwarteng (front right) meets with other G7 finance ministers during the IMF Annual Meetings in Washington, October 12, 2022 [Photo / CC BY-NC-ND 2.0]

On Tuesday the Institute for Fiscal Studies (IFS) issued a report concluding that the chancellor would be required make £62 billion pounds of spending cuts or tax rises. It said the cost of the energy cap support package was the main factor in increasing government borrowing to almost £200 billion this year.

The Financial Times noted, “But the IFS estimated that even in 2026-27, after this support has ended, government borrowing will amount to £103 bn — about £71bn more than official forecasts showed in March — with the increase largely owing to the tax cuts Kwarteng announced last month.”

The IFS outlines various “big and painful” scenarios in which the £62 billion could be clawed back, including indexing working-age benefits to earnings rather than inflation for two years (£13 billion), an 8 percent cut in all day-to-day spending on public services (£35 billion), and reducing investment spending to 2 percent of GDP (£14 billion). The FT notes IFS calculations that if the entire £62 billion is to come from public spending savings, this would require cuts of 15 percent in every department if defence and the National Health Service were not ringfenced, and of more than quarter (27 percent) if they were.

IFS director Paul Johnson advised, “The specifics of the UK government’s fiscal strategy are under more scrutiny by financial markets than at any point in the recent past... The chancellor should not rely on over-optimistic growth forecasts or promises of unspecified spending cuts.”

Bullying the working class to accept de facto pay cuts, the IFS warns that inflation-matching pay rises in the public sector, costing the public purse an additional £25 billion, would necessitate 500,000 job cuts by 2024−25. This is 8.6 percent of the public sector workforce.

The IFS warns that continuing with below-inflation deals will trigger further working-class resistance. Bee Boileau, an IFS Research Economist, said, “Not offering higher pay awards risks a wave of strikes and ongoing challenges with recruitment and retention.”

Millions of workers have suffered massive shocks to their incomes due to a litany of well below-inflation pay rises agreed by the trade union bureaucracy and the employers throughout the private and public sectors. Union leaders have sought to palm these off as “victories” on the basis that they are the best deals that can be won, and that inflation will start to fall soon.

Such lies are torn apart by an International Monetary Fund (IMF) survey published this week warning that high inflation will persist longer in the UK than similar economies. It predicts that the Consumer Price Index measure of inflation will remain high at 6.3 percent by the end of 2023. This is higher than that forecast for every member of the eurozone apart from Slovakia. CPI, currently at 9.9 percent, is usually 2 to 3 percent lower than the more accurate Retail Prices Index (RPI) measure of inflation, so the IMF prediction means a forecast of inflation at 9 or even 10 percent in a year’s time. Even this could be optimistic given the growing threat of a global economic catastrophe.

The IMF intervened Wednesday to insist that there could be no alternative to the Truss government, or any other, carrying out austerity as the main remedy for high inflation. Its Fiscal Monitor report states that austerity was required and “necessary to help tackle inflation and address debt vulnerabilities”. Once again, austerity demands are directed against the working class, with the insistence that restraining public sector pay “could help contain overall wage and price pressures”.

Other research published this week by the Legatum thinktank shows that a real-terms cut in welfare benefits would increase the number of people in Britain living in poverty to 16 million. The Joseph Rowntree Foundation estimates that the poorest tenth of the population would see earnings fall as a result of the measure by £214 a year once personal tax changes are factored in. Research published by the Child Poverty Action Group found that raising benefits in line with the average increase in workers’ pay (about 5 percent) rather than in line with inflation would push 200,000 more children into poverty.

Germany’s gas price cap: A gift for large corporations and the rich

Peter Schwarz

The Gas Price Commission set up by the German government presented a proposal on Monday for cushioning high natural gas and energy prices with government money. It envisions lavish cash gifts for large corporations and the wealthy, while the poor, ordinary earners and small businesses will still be unable to absorb the skyrocketing costs despite government aid.

24 million private households and small businesses are expected to bear the full brunt of higher gas prices in the heating-intensive winter months of January, February and possibly March. The tariff has risen from around 7 cents per kilowatt hour before the sanctions against Russia were imposed to between 20 and 30 cents.

For December, the Commission proposes a one-time payment equal to this September’s monthly bill. This is a highly arbitrary value, as the September bill for many households was still based on the old prices. The main beneficiaries are wealthy villa owners with high gas consumption, who are treated in the same way as tenants of small apartments.

A certain “watering can subsidy” was unfortunately unavoidable, commented the chairmen of the commission, “economic expert” Veronika Grimm, the president of the BDI industry association, Siegfried Russwurm, and the chairman of the IG BCE chemical workers union, Michael Vassiliadis, with a shrug.

It will not be until March or April that private customers and small and medium-sized enterprises will be able to purchase 80 percent of their previous year’s consumption at its government-subsidized price of 12 cents. That is still almost twice as much as before the Ukraine war. For anything above that, they will have to pay the full market price.

In total, this is expected to cost the state around €66 billion by the end of April 2024. A further €30 billion is earmarked for subsidizing around 25,000 large companies with an annual consumption of over 1.5 megawatt hours, which will start benefiting from subsidized prices as early as January 1.

They will be guaranteed a gas price of 7 cents per kilowatt hour for 70 percent of the previous year’s consumption. BDI President Russwurm claims that this is roughly equivalent to the 12 cents for private consumers, since it is a pure procurement price and not the gross tariff including taxes and fees, as is the case for private customers. But it is obvious that large corporations are being favoured. Here, too, the Commission is acting according to the watering-can principle. Highly profitable corporations benefit from the state money just as much as those threatened with bankruptcy.

The €96 billion for the gas price cap does not include the €50 billion the government is using to rescue intermediaries like Uniper, which have run into difficulties due to the lack of supplies of cheap gas from Russia. This money then ends up directly in the bank accounts of the big energy companies, which are making record profits because of the high prices.

The gas price cap and the bailout of the middlemen will require around three-quarters of the “double whammy” package of €200 billion announced by the German government in September. This does not even take into account rising electricity and oil prices. Indeed, the massive rise in electricity prices is only partly due to the high price of gas, which economists generally believe will never return to pre-war levels. And a new price explosion is looming on the oil market.

The reason is the EU Commission’s effort to impose a price cap on Russian oil exports to all countries in the world. It is to be enforced by punitive measures against shipping companies that transport Russian oil and against insurance companies that insure the shipments. If Russia defies these measures, it faces a massive shortage of oil and diesel and a corresponding price explosion.

Efforts to get Saudi Arabia and other OPEC countries to increase production have failed. Instead, OPEC countries, fearing international price dictates, have cut production by two million barrels per day. To prevent a further price increase before the November mid-term elections, the US is now discussing an oil export ban, which would additionally hit Europe.

The huge sum of €200 billion for lowering the price of gas will not be financed directly from the federal budget so as not to jeopardize the debt ceiling, to which the Social Democrat-Liberal Democrat-Green coalition continues to adhere. Instead, the government has reactivated the Economic Stability Fund, which was set up in 2008 to rescue banks during the financial crisis and relaunched in 2020 to protect corporations such as Lufthansa and TUI from the consequences of the coronavirus crisis.

But unlike then, when at least some of this money flowed back after the crisis subsided, the €200 billion (and what will follow) will have to be fully financed from the national budget, which will inevitably come at the expense of social spending due to rapidly rising arms expenditures. With the war against Russia, which NATO has systematically provoked and continues to escalate despite the danger of nuclear war, the German government has also declared war on the working class.

All representatives of the ruling class are moving together in this: The establishment parties, from the Greens, the SPD and the Left Party to the far-right Alternative for Germany (AfD), the business associations and the trade unions. As in World War I, when the unions and corporations agreed to an “industrial truce,” and in World War II, when the Nazis united them in the corporatist German Labour Front, they are again conspiring against the working class.

The Gas Price Commission set up by the German government embodies this fusion of state, corporations and unions. It consists of 21 representatives from business, science, social associations and unions and is headed by the boss of the largest business association, Siegfried Russwurm, and the chairman of the chemical workers union, Michael Vassiliadis. The latter is also the partner of Yasmin Fahimi, chairwomen of the German Union Confederation (DGB) and a leading SPD politician.

The aggressive actions of the German government and its allies are exacerbating not only social antagonisms in Germany and across Europe, but also national tensions within the EU. Leading European politicians have strongly protested the €200 billion package because, in their view, it constitutes a trade war measure.

Hungarian Prime Minister Viktor Orbán called it “the beginning of the EU’s self-laceration” and scolded: “The rich are helping their companies with huge sums, while the poor can’t.” Italian Prime Minister Mario Draghi warned it undermined “the logic of the [European] Union at its roots.”

In a newspaper article, EU Commissioners Thierry Breton (France) and Paolo Gentiloni (Italy) complained about the consequences for member states “that do not have the same budgetary leeway as Germany to provide comparable support to their companies and households.” They warned that what was ultimately at stake was “the success of our European project.”

US-instigated tensions around Korean Peninsula intensify

Ben McGrath

The United States is continuing to ramp up tensions with North Korea following a series of North Korean missile tests even as Washington intensifies its confrontation with China. The US is exploiting these missile launches as the pretext for its military build-up against China, particularly in North East Asia alongside its military allies—Japan and South Korea.

North Korea has conducted a number of missile tests between September 25 and October 9. The latest launch took place shortly before 2 a.m. Sunday morning when Pyongyang fired two, short-range ballistic missiles (SRMB) into the Sea of Japan. In total, the North has launched 12 projectiles, including sending an intermediate-range ballistic missile (IRMB) over Japan on October 4. It was the first missile North Korea has launched over Japan since 2017.

U.S. Secretary of State Antony Blinken, left, and South Korean Foreign Minister Chung Eui-yong, right, pose for the media before their meeting at the Foreign Ministry in Seoul, South Korea, Wednesday, March 17, 2021. After Tokyo, President Joe Biden’s top diplomat and defense chief are traveling to South Korea after North Korea made sure it had their attention by warning the United States to refrain from causing trouble amid deadlocked nuclear negotiations. (AP Photo/Lee Jin-man, Pool)

On Monday, which was also the 77th Party Foundation Day, the state-run Korean Central News Agency (KCNA) reported that the missile drills took place “under the simulation of loading tactical nuclear warheads.” The exercises confirmed “the order of taking tactical nuclear warheads out and transporting them and of managing them in a rapid and safe way at the time of operation.”

North Korean leader Kim Jong-un was quoted as saying, “This is the verification of the operation posture of our war deterrent and, at the same time, an occasion that proved the reliability of the thorough preparedness of the state nuclear defense posture.”

North Korea is responding to the US war planning in the region, which is primarily aimed at China as Washington and Tokyo, backed by South Korea, attempt to provoke a war over Taiwan. The US plans include a return to large-scale military exercises with South Korea and Japan on China’s doorstep.

At the same time, Washington is creating a situation to which Pyongyang feels it must respond. The US had halted large-scale joint military exercises with South Korea under the previous Donald Trump administration in a tacit agreement with Pyongyang to place a moratorium on nuclear and intercontinental ballistic missile (ICBM) tests.

The US and South Korea have now resumed major war games for the first time in five years. The Pentagon deployed the USS Ronald Reagan nuclear-powered aircraft carrier and its strike group to the Sea of Japan for joint drills beginning September 26. Following the launch of the IRBM on October 4, the US redeployed the USS Reagan, which had left the previous week, to the Sea of Japan for additional drills in a move the South Korean Joint Chiefs of Staff called “very unusual.”

The US State Department on Monday also denounced North Korea’s missile tests as “unlawful and destabilizing the region” while “reject[ing] the notion that our defensive actions to respond to the DPRK [North Korea] threats justifies their escalatory and unlawful behavior.” The State Department claimed, “We remain committed to a diplomatic approach to the DPRK and call on the DPRK to engage in dialogue.”

In reality, Washington has refused to address Pyongyang’s well-founded security concerns. North Korea, an impoverished, former colonial country of 26 million people, has long been the target of US imperialism, from the division of the Korean Peninsula and the 1950‒1953 Korean war to the Trump administration’s threats in 2017 to “totally destroy” the country. Furthermore, the US has a long track record of illegal invasions and regime-change operations in countries around the world that do not line up behind US interests.

Washington’s claims that it is committed to a diplomatic solution to the dangerous standoff with North Korea ring hollow—particularly as the US wages war against Russia in Ukraine at the risk of nuclear Armageddon.

US imperialism, backed by Japanese imperialism and South Korea, has systematically isolated Pyongyang through crippling economic sanctions, which have created an economic crisis alongside the COVID-19 pandemic. As it targets China over Taiwan, the Biden administration has allowed North Korea to languish under these conditions, including new sanctions on October 7 targeting two individuals and three entities. Pyongyang’s missile tests represent an attempt to bring Washington to the bargaining table to negotiate an end to these sanctions.

South Korea’s right-wing administration of President Yoon Suk-yeol, which came to office in May, has also contributed to this instability on the Korean Peninsula. Yoon’s presidential office stated on Monday, “It is important to accurately recognize the grave security reality on the Korean Peninsula and in Northeast Asia and prepare appropriately for it.” Seoul has followed Washington’s lead, not only in restarting joint military exercises but on a key US demand: the improvement of bilateral relations with Japan.

Driven by trade and other disputes, Seoul and Tokyo’s relations have been strained in recent years. However, last Thursday, Yoon and Japanese Prime Minister Fumio Kishida spoke by phone to discuss their response to North Korea, and denounced Pyongyang’s weapon tests. Yoon stated the following day, “We shared the understanding that if relations between South Korea and Japan return to the good times of the past at an early date and exchanges between businesses and between our people become smooth, it will be of great help to the two countries’ economies.”

What goes unstated is the fact that improved relations between the two is a necessity from Washington’s standpoint for its anti-ballistic missile system being installed throughout the region. This system above all targets China and includes the Terminal High Altitude Area Defense (THAAD) battery installed in Seongju, South Korea and its corresponding radar, two of which are deployed in Japan. In order to effectively operate this system, the US requires high-level, bilateral intelligence sharing and cooperation between Tokyo and Seoul.

In addition, on October 6, the US military delivered equipment to Seongju to complete an upgrade of its THAAD battery. The presence of the battery and its radar system capable of spying on Chinese territory has falsely been presented as a necessary defensive measure to protect the South Korea population from a North Korean attack. From its current location, however, the battery’s 200-kilometer range does not even cover Seoul, South Korea’s capital of ten million people.

Amid a rapidly intensifying US confrontation with China, US pressure on North Korea is creating another dangerous situation in the Asia-Pacific that could spiral into a larger conflict.

German Government delivers air defence system to Kiev

Johannes Stern

Germany’s traffic light coalition government is supporting the escalation of the NATO proxy war against Russia in Ukraine with further arms deliveries to Kiev and a reinforcement of its own war offensive.

“Germany delivers the first of four IRIS-T SLM air defence systems to Ukraine,” announced the Ministry of Defense on Tuesday via Twitter. “The recent Russian missile attacks on Kiev and other cities” has shown “how important this capability is for the self-defence of Ukraine.”

Ukrainian Defence Minister Oleksi Resnikov praised German arms supplies, stating, “A new era of air defence has begun in Ukraine. IRIS-Ts from Germany are already here. The American NASAMS are coming. This is only the beginning. And we need more. No doubt that Russia is a terrorist state.”

In a further tweet, he expressed his “personal thanks” to his “German colleague,” Defence Minister Christine Lambrecht (SPD), for “her partnership and strong commitment to supporting Ukraine” and assured, “We will win.”

The system produced by the German defence company Diehl Defence is one of the most modern air defence systems and, according to the manufacturer, is suitable for 360-degree all-round defence against aircraft, helicopters, drones, cruise missiles and short-range ballistic missiles. Even the German army does not yet have IRIS-T systems.

Diehl IRIS-T SLM launcher (Matti Blume, CC BY-SA 4.0, via Wikimedia Commons) [Photo]

The delivery of the system is part of the massive war escalation that is currently being organized by the leading NATO powers and increases the risk of a nuclear third world war. Just a few days ago, US President Joe Biden warned against a “nuclear Armageddon.” Now the war is being fueled massively.

At the beginning of the latest meeting of NATO defence ministers in Brussels, NATO Secretary General Jens Stoltenberg announced an expansion of NATO states’ military production capacities. “The longer this war lasts, the more important it is that we are able to replenish supplies,” he said. In the war against Russia, Ukraine needs a “wide range of different systems. They need almost everything.”

Germany is playing an increasingly prominent role in the flooding of Ukraine with deadly military equipment. According to the official list of the German government on “military support services for Ukraine,” the following further arms deliveries are planned or already on their way:

• 16 Zusana armoured howitzers (joint project with Denmark and Norway)
• 130 field heaters
• 36 ambulances
• 10 Bridge systems (heavy and medium bridge systems)
• 90 heavy-duty semitrailers
• 4 self-propelled howitzers 2000 with ammunition package
• 2 multiple rocket launchers MARS II with ammunition
• 50 Dingo armoured Transport Vehicles
• 167,000 rounds of handgun ammunition
• 12 M1070 Oshkosh heavy-duty semitrailers
• 20 70mm rocket launchers on pickup trucks with 2000 rockets
• 255 rounds of 155mm Vulcano artillery ammunition
• 30,000 rounds of 40mm ammunition
• 5032 antitank handguns
• 200 commercial truck vehicles
• 24 drone defence systems
• 16 BEAVER bridge-laying tanks

The delivery of heavy battle tanks is also being prepared. Before the meeting of NATO defence ministers began, the chairman of the federal parliament’s (Bundestag) Foreign Affairs Committee, Michael Roth (Social Democrats, SPD), calculated that 13 European states had a total of 2,000 Leopard 2 tanks. He therefore suggests that “together we put together a contingent of Leopard 2 tanks, which we then deliver to Ukraine as quickly as possible.”

The proposal was immediately supported by the Chairman of the Defence Committee, Marie-Agnes Strack-Zimmermann (Free Democrats). In addition, she reiterated her demand on Deutschlandfunk radio to also provide Ukraine with Marder infantry fighting vehicles from the German armed forces. These are now urgently needed by the Ukrainian army, especially on the southern front, she claimed. Russia’s approach is pure “terror” and “beastly.”

Coming from the mouth of a leading German warmonger, this is repulsive and hypocritical. Putin’s invasion is reactionary and corresponds to the unscrupulous interests of the capitalist oligarchy that has ruled the Kremlin since the Stalinist dissolution of the Soviet Union. But the Russian missile strikes do not come close to the destruction perpetrated by the US-led and German-backed wars in the Middle East, North Africa and Central Asia, where entire countries have been destroyed and millions of people killed.

Above all, representatives of German imperialism should remain silent for all time when it comes to the question of war crimes. If anything was “bestial,” it was the crimes of German imperialism. During the Second World War, the Wehrmacht waged a war of extermination in the East, which claimed the lives of between 24 and 40 million inhabitants of the Soviet Union. Six million Jews were industrially killed in extermination camps. Some of the worst massacres—such as that of Babyn Yar, where a special commando unit shot 33,771 Jews in two days—occurred in Ukraine.

The official propaganda that today the war against Russia is about “self-defence of Ukraine” or even about “peace,” “democracy” and saving human lives is an absurdity. In reality, it is about the same predatory goals as then. The imperialist powers have provoked Putin’s invasion of Ukraine to defeat Russia militarily and exploit the resource-rich country. They cooperate with fascist forces in Kiev and use the Ukrainian population as cannon fodder.

The ruling class in Germany also sees the war as an opportunity to rise again to a leading military power despite its historical crimes. “As the most populous nation with the greatest economic power and a country in the middle of the continent, our army must become the cornerstone of conventional defence in Europe, the best-equipped military force in Europe,' said Federal Chancellor Olaf Scholz (SPD) at the recent German army (Bundeswehr) conference in September.

Berlin’s plans to organise Europe under German leadership are now being intensified. According to a report by Der Spiegel, “On the sidelines of the NATO Defence Ministers’ Meeting in Brussels headquarters, a joint declaration of intent will be signed by the European states wishing to participate in the common defence system against ballistic missiles and other aerial threats proposed by Chancellor Olaf Scholz.”

According to Der Spiegel, “the Israeli ‘Arrow’ system is likely to be purchased for missile defence.” The news magazine makes no secret of the fact that Germany is thus preparing for a potential nuclear war. The system is “designed to launch rockets beyond the Earth's atmosphere,” writes Der Spiegel. “Above all, incoming nuclear, biological or chemical missiles are to be destroyed safely by means of these so-called high shooters.”

Scholz already announced the establishment of a German-European missile system as part of the war escalation against Russia in March. It was “urgently necessary that we provide the Bundeswehr [Armed Forces] with more resources, with more tanks, more air defence capabilities, and enable it in many other ways so that it can perform the task it has to perform,” he explained on the ARD show “Anne Will” at the time. The multibillion-dollar project is now underway.

White House draws up blueprint for World War III

Andre Damon

Less than one week after US President Joe Biden warned that the US conflict with Russia could trigger a nuclear “Armageddon,” the White House published a national security strategy pledging to “win” American global hegemony through military violence.

The document pledged to expand the US military, “integrate” economic life with war-making, and “win the competition for the 21st century” in what it called the “decisive decade.”

Embracing in all fundamentals the 2018 national defense strategy published by the fascist would-be dictator Donald Trump, Biden’s national security strategy affirms that the United States is locked in an existential national conflict with Russia and, most of all, China.

Joint Cheifs of Staff Chairman Gen. Mark Milley (left) with President Joe Biden (AP Photo/Steve Ruark)

“We are now in the early years of a decisive decade for America and the world,” declares Biden’s personal introduction to the document. “The terms of geopolitical competition between the major powers will be set.”

These opening remarks echo Biden’s declaration in March that the world is on the brink of a “new world order,” and that “we’ve got to lead it.”

Biden’s strategy, like Trump’s 2018 national security strategy, is violently nationalistic, declaring that the United States acts not in the interests of humanity or of its allies, but fundamentally to preserve its selfish interests. “Our strategy is rooted in our national interests,” Biden declares.

“Our military power continues to grow,” the document menaced, pledging to “Modernize and strengthen our military so it is equipped for the era of strategic competition.”

For these reasons, the document threatens, “nations are seeing once again why it’s never a good bet to bet against the United States of America.”

“Nuclear deterrence remains a top priority for the Nation,” and is “foundational” to the US’s strategy.

War, Biden says in his introduction, will be a source of national rejuvenation: “the United States has a tradition of transforming…foreign challenges into opportunities to spur… rejuvenation at home.”

The document sets forth the concept of “integrated deterrence,” developing key concepts in Trump’s 2018 national defense strategy, which pledged that “long-term strategic competition requires the seamless integration of multiple elements of national power—diplomacy, information, economics, finance, intelligence, law enforcement, and military.”

Similarly, the new national security strategy declares, “We will leverage all elements of our national power to outcompete our strategic competitors”

It adds, “Our National Defense Strategy relies on integrated deterrence: the seamless combination of capabilities to convince potential adversaries that the costs of their hostile activities outweigh their benefits. It entails: Integration across domains, recognizing that our competitors’ strategies operate across military…and non-military (economic, technological, and information) domains—and we must too.”

In perhaps the most chilling passage, the document declares that “The Biden-Harris Administration has broken down the dividing line between domestic and foreign policy.”

These concepts, pioneered under the Trump administration that openly drew inspiration from the Third Reich, echo the infamous “total war” manifesto of Alfred Jodl, chief of the German High Command during World War II, which declared that “Only the singleness and unity of state, armed forces, and people can assure success in war.”

Noting the continuity with Trump’s fascist “America first” ideology, New York Times reporter David Sanger observed that “The president took some unusual positions, especially for a Democrat,” noting that “he took a dark view of the benefits of globalization, describing at length how it has fueled pandemics and disinformation and contributed to supply chain shortages.”

The central target of the United States is China. The document asserts, “We will effectively compete with the People’s Republic of China, which is the only competitor with both the intent and, increasingly, the capability to reshape the international order.”

So single-minded is the focus on China, that the war in Ukraine is not even mentioned a single time in the White House’s fact sheet or document. Despite the Biden administration’s claims that the world would bloom like a garden were it not for Russian President Vladimir Putin’s invasion of Ukraine, the strategy does not predicate the US military buildup and preparations for war on the actions of the Russian president.

Rather, the US struggle to “win” the 21st century is predicated on the fact that the “post-Cold War era is definitively over and a competition is underway between the major powers to shape what comes next.”

Even as the national security strategy set its sights on China, the US continued to massively escalate the war with Russia. Speaking at a meeting of the U.S.-led Ukraine Defense Contact Group, Defense Secretary Lloyd J. Austin made clear that the US has instructed its Ukrainian proxy forces to continue their offensive through the winter.

“I expect that Ukraine will continue to do everything it can throughout the winter to regain its territory and to be effective on the battlefield, and we’re going to do everything we can to make sure that they have what’s required to be effective,” Austin said.

Ahead of this week’s NATO summit, NATO Secretary-General Jens Stoltenberg made clear that the US and its allies will respond to Russia’s threats to use nuclear weapons in the conflict with its own nuclear saber-rattling.

Stoltenberg announced, “Next week, NATO will hold its long-planned deterrence exercise, Steadfast Noon,” announcing his intention to launch a training mission for nuclear-capable bombers in Southern Europe.

Under conditions in which Ukrainian president Volodymyr Zelensky has called on NATO to wage preemptive strikes on Russia, and Russia has threatened to use nuclear weapons in Ukraine, the NATO training exercise threatens to further escalate the war.

Viewing the present conflict within the context of Biden’s national security strategy, it is clear that the strategists of US imperialism see the war in Ukraine, horrific and bloody as it is, as just the opening skirmish of an even greater and more disastrous global conflict.

UK economic crisis leading to soaring housing costs

Thomas Scripps

The combined effects of interest rate rises pursued by the world’s leading central banks and Chancellor Kwasi Kwarteng’s mini budget of giveaways to the super-rich is hiking up UK mortgages and rent. A wave of arrears, bankruptcies, repossessions and evictions is threatened.

Roughly 600,000 mortgages will be renewed in the next six months, meaning nearly 3,300 households a day will have to take on hundreds of pounds a month in extra repayments. Around 2 million coming to the end of a fixed rate deal will have to do the same in the next year. Another 2 million already on variable rate deals will see an immediate increase.

The Chancellor Kwasi Kwarteng (third from left) meets retail and challenger bank leaders at the Treasury, October 6, 2022. [Photo / CC BY-NC-ND 4.0]

After Kwarteng’s September 23 budget, investors led a run on the pound and UK bonds, signaling they expect the Bank of England to raise interest rates to 6 percent by early next year. This led to a mass withdrawal of mortgage deals by high street banks—as much as 40 percent of offers. They have gradually returned, but at much higher repayment rates.

According to data provider MoneyFacts, the average cost of a two-year fixed rate mortgage is 6.43 percent, and a five-year fixed rate mortgage is 6.29 percent—both the highest since the 2008-9 financial crash. These figures sat at just 2.25 percent and 2.55 percent a year ago and have continued to increase over the last three weeks.

Two months before Kwarteng’s budget, UK Finance, the banking trade body, was warning that much smaller expected rises in interest rates would lead to two-year mortgage holders losing a quarter of their disposable income to increased repayment charges. Five-year mortgage holders would lose a fifth.

Now the fall will be significantly worse. The Royal Bank of Canada has calculated that average mortgage repayments will rise by between £250 and £470 a month, or £3,000-£5,640 a year. As an example, MoneyFacts predicts that a household with a £200,000 mortgage paying back over 25 years would be charged over £400 more a month for a two-year deal than they would have been last December.

According to property market consultancy BuiltPlace, mortgage payments accounted for 20 percent of household income this June. It expects this to rise to 27 percent if mortgage rates hold at 6 percent. This is higher than during the financial crash (24 percent) and close to the all-time high of 30 percent in 1990.

There is a particular squeeze on the rentier landlords with buy-to-let mortgages, the price of which will be paid by renters. “I think a lot of landlords are going to either try to up the rent as much as they can to ensure that they are still making money on their buy-to-lets, or they’ll have to try to pump a little bit more equity into those properties to bring their mortgages down,” the head of research at Hamptons Aneisha Beveridge told the New Statesman.

RBC analysts say passing on these costs could lift rents by £280 a month. They are already at record highs—a UK average of £1,159 a month, rising to £1,945 in Greater London—and paid by some of the most impoverished families in the country.

Sue Anderson, head of media at debt charity StepChange, told Reuters, “Many households can ill afford this extra pressure - nearly one in two British adults are struggling to keep up with household bills and credit commitments, up from 30% in October 2021 and 15% in March 2020.”

This is putting it mildly. Millions of households are only keeping up with bills at all by skipping meals and switching off the heating.

Typical housing in a British city. Terraced housing in Lea Road, Wolverhampton [Photo by Roger Kidd / CC BY-SA 4.0]

The response in the City has been a mixture of joy at the sudden windfall of mortgage payments and concern that the process might bleed their debtors dry. Reuters wrote bluntly, “While British households head into a winter of soaring energy costs, a tumbling currency and nearly double-digit inflation, the country’s banks are in line for a handsome payday as mortgage prices spike after a decade of stagnation.”

According to market analyst Jefferies, Britain’s largest retail banks—NatWest, Lloyds and Barclays—will grow their revenue by £12 billion by 2024 (a 25 percent increase), in large part thank to fattening mortgage margins.

Reuters continues, “Banks are finding the home loan market stacked in their favour after years of low mortgage rates, but are also aware that bigger mortgage bills could spell trouble for cash-strapped customers.”

John Cronin, banking analyst at Goodbody, told the news service, “The problem is people refinancing at 6%, who were at say 2%, are going to suffer massive outflows of cash to support those mortgage payments.” He added, “My worry is that the banks’ provision models don’t adequately reflect that affordability challenge”.

Jim Leaviss, at investment manager M&G, agreed, “Everyone who rolls off fixed on to variable, or fixed on to a new fixed rate, is going to see their monthly payments go up so dramatically on top of what's going on already around food and energy costs.”

A senior banker explained that though mortgage defaults were currently low, they were typically the last expense to be cut back: “We expect it to be larger scale than normal, and it’s not started yet.”

One of the UK largest mortgage lenders, Santander, has already reported an increase in customers falling behind on mortgage payments. The bank is putting aside extra money to account for defaults. Borrowers’ finances are stress-tested for possible interest rate rises when they apply for mortgages, but the increases are already reaching the limit of these tests.

CEO Mike Regnier told the Guardian, “There are lots of customers who… will be paying significantly more than they were doing previously, and that will come as a shock. And some people will find that very difficult.”

Soaring mortgages have intensified concerns about a housing crash already playing out across advanced economies internationally. Adam Slater, from forecaster Oxford Economics, warned, “This is the most worrying housing market outlook since 2007‑08,” predicting house prices would fall 13 percent across 2023-24.

A deeper 20 percent fall, BuiltPlace analyst Neal Hudson warned, would leave one in 20 mortgage holders nationally, and one in 10 in London, in negative equity. This is when the value of the house falls below the value of the mortgage used to buy it, making it largely impossible to move or refinance.

Previous crashes have seen house prices fall by 26 percent (2007-9) and 37 percent (the early 1990s).

Popular personal finance adviser Martin Lewis warned on Good Morning Britain Monday, “If you’re watching, regulator, Bank of England, government, you need a mortgage emergency plan now, or there’s a ticking timebomb”.

OPEC agrees to major oil production cut, sparking US-Saudi rift

Gabriel Black

The Organization of the Petroleum Exporting Countries (OPEC) agreed last Wednesday to cut its members’ oil production by 2 million barrels per day. The decision is seen as one of the most significant by the oil cartel in recent history.

The oil cut is widely viewed as a slap in the face to the United States and the Biden administration. It comes just two months after President Joe Biden’s trip to visit Mohammed bin Salman, the crown prince of the theocratic dictatorship of Saudi Arabia. The Financial Times described the move as a “breach in the alliance” between Saudi Arabia and the US.

The Biden administration has been somewhat restrained in its public response to the announcement. President Biden stated that he was “disappointed.”

But his administration also released a statement accusing OPEC of “aligning with Russia.” Russia is a member of the expanded group of OPEC known as OPEC Plus. Russia’s deputy prime minister, Alexander Novak, attended the meeting in Vienna.

Though the production cut was announced as 2 million barrels per day, the actual reduction is expected to be closer to 1 million. The world produces about 100 million barrels of oil (mb/d) every day. Already, most OPEC members are struggling to meet their expected quotas, which is why the projected impact of last week’s announcement is smaller than the nominal reduction. Nevertheless, removing 1 percent of the world’s oil from the market over the coming months will have a significant impact.

First, the cuts mean that energy prices will remain higher for longer. OPEC members cited the risk of global recession as justification for their cut. Anticipating that the US-led rise in global interest rates will trigger a full-on recession by the end of next year, OPEC wishes to signal to the markets that it will take measures to keep oil at about its current general price range.

Oil is the bedrock of the modern economy, used in the production and distribution of virtually every product on the planet. The cuts will encourage not just high oil prices, but high prices in general. There is a significant risk that as the world’s central banks take the global economy into a recession, the downturn will be combined with high energy prices. The combination of mass joblessness and high prices is a recipe not just for misery, but also for a social explosion.

Such concerns motivated US Treasury Secretary Janet Yellen’s comment that the cuts were “unhelpful and unwise.” Yellen had in mind the effect energy prices would have on the class struggle, particularly in developing countries. She told the Financial Times, “We’re very worried about developing countries and the problems they face.”

There is no shortage of hypocrisy in Yellen’s comments. She is leading a rise in interest rates that is not only engendering mass joblessness, but also a surge in the dollar. A high dollar lessens the ability of developing countries to pay debts, frequently denominated in US dollars.

The American ruling class is content to take destructive economic measures which it sees as benefiting its interests, but is incensed by OPEC countries asserting their interests.

“It’s hard to overstate how anxious the Biden administration is about a potential resurgence in oil prices,” said Bob McNally, a leading oil energy analyst.

Alarmed by the surge in workers’ struggles across the country and the looming midterm elections, the Biden administration is terrified that even with a recession prices will not decline.

At OPEC’s press conference in Vienna, the UAE energy minister stated that the cuts were aimed at staving off a crash in oil prices that would contribute to ongoing difficulties in raising money for new oil and gas projects. Since 2014, new oil and gas investment has been substantially reduced.

OPEC members are also reported to be annoyed about the recently implemented price cap on Russian oil. They worry that measures which so far have been used only against Russia could, in the future, be deployed against other countries—pitting Western control over the financial system against rent-seeking resource-based states.

Within the US ruling establishment, there are growing calls to punish Saudi Arabia. “There’s got to be consequences for that. Whether it’s lifting the cartel’s immunity or rethinking our troop presence there,” Democratic Senator Chris Murphy told CNN.

Murphy continued, “For years we have looked the other way as Saudi Arabia has chopped up journalists, has engaged in massive political repression, for one reason: we wanted to know that when the chips were down, when there was a global crisis, that the Saudis would choose us instead of Russia. Well, they didn’t. They chose Russia.”

Thus, Murphy acknowledged that the Democratic Party can overlook Saudi Arabia murdering journalists and executing its citizens ... as long as its rulers toe the line against those regimes targeted for destruction by American imperialism.

The hostility they now express is not a reaction to the greed of the Saudi despots and the other members of the oil cartel. It is rather an expression of their diverging objective interests as the crisis of capitalism intensifies.