How Russia is Countering the West’s Economic Sanctions

John P. Ruehl

Immediately after the Russian invasion of Ukraine in February 2022, the U.S., the UK, and the EU placed major sanctions on Russia to constrict its economy and restrain its war effort. Having been updated several times since, these sanctions have compounded the effects of the previous sanctions placed on Russia in 2014 after it annexed Crimea.

The Russian “economy contracted for the second quarter in a row,” according to a November 16 article in the Financial Times, which attributed this downturn to the Western sanctions. Undermining the sanctions through a variety of methods, including cooperating with other countries with sanctions evasion experience, has become an even greater priority for the Kremlin.

Russia has decades of history in helping other countries evade sanctions. In recent years, Russia has exported oil to North Korea and employed its laborers in Siberia in violation of international sanctions, while Russian entities have also been sanctioned for aiding North Korea’s weapons programs.

The Kremlin is now calling in its own favors. Weeks after North Korea and Russia pledged “to strengthen ties” in August 2022, North Korea is believed to have supplied Russia with millions of rockets and artillery shells, undermining Western attempts to isolate the Russian military-industrial complex.

Using North Korean laborers to help rebuild Donetsk and Luhansk—Russian-supported eastern Ukraine breakaway republics—has also been proposed. Additionally, Moscow has recently shown greater enthusiasm toward cryptocurrencies to evade sanctions, and may also look to emulate North Korea by mining bitcoin to increase its access to fiat currencies and facilitate underground trade.

Iran has faced heavy Western sanctions since 1979, aimed at restricting its economy and curbing its weapons programs. In November, Iran was suspected of asking Russia for aid with nuclear energy materials, which could significantly shorten the “breakout time” needed to create a nuclear weapon.

Russia will likely acquiesce, having received significant drone and missile shipments from Iran since September. With the “price cap on Russian seaborne oil” coming into effect from December 5 (and the ban on most petroleum products expected to take place by February 5, 2023), Iran’s assistance in evading oil sanctions will be greatly appreciated in Moscow.

Iranian oil exports, for example, plummeted by 90 percent following the reintroduction of sanctions after former President Donald Trump’s administration pulled out from the Iran nuclear deal, the Joint Comprehensive Plan of Action, in 2018. However, a mix of tactics has allowed Iranian oil exports to rebound in the years since.

These included sanctioned ship-to-unsanctioned ship transfers, changing ship names and other identification markers to disguise Iranian oil tankers, turning off Automatic Identification Systems to make sanctioned ships completely vanish off the radar, and blending Iranian oil with bulk cargoes from other countries to disguise its origin.

Oil giant Shell faced criticism in April for undermining sanctions by purchasing “Latvian blend” oil, almost half of which (49 percent) originated from Russia. The UK has also received hundreds of millions of dollars of Russian oil since its invasion of Ukraine, even as some of this oil “was registered as imports from Germany, Belgium, and the Netherlands.”

Russian and Iranian officials have also discussed using Iran as a “backdoor” to allow Russian oil products to enter global markets, which will become easier should a renewed nuclear deal between Iran and Western states go through.

Russian entities have similarly shown effectiveness in getting sanctioned Venezuelan oil to global markets in recent years. After Russian oil giant Rosneft was sanctioned in 2020 for doing so, the Kremlin quickly created a new oil company, Roszarubezhneft, to continue operations after Rosneft left Venezuela.

With Russian assistance, Venezuela’s oil exports doubled from December 2020 to December 2021, finding many other facilitators and buyers in the global market. In 2021, the U.S. Treasury sanctioned several European oil traders who were working with a Mexican network that was shipping Venezuelan oil to companies in China, Indonesia, and other countries in Southeast Asia.

Creating shell companies has also historically blunted the effectiveness of sanctions. Syrian officials have created countless shell companies to blur ownership of economic assets in recent years, and Iranian clearing houses and foreign-registered front companies have conducted tens of billions of dollars in sanctions-evading trade annually, according to Politico.

Western banks, like Germany’s Commerzbank AG and Deutsche Bank AG, and the U.S.’ Citigroup, often unknowingly, helped Iran conduct underground export transactions and may face Russian attempts to use these banks to facilitate similar transactions—“either wittingly or unwittingly.” Russian oligarchs also have plenty of connections to Western financial actors and the ability to expand their economic empires in other countries.

Nonetheless, the ambitious Russian oil price cap that has been introduced on December 5 has worried some in Moscow as “About 95 percent of the world’s tanker liability coverage is arranged through a City of London-based insurance organization called the International Group of Protection and Indemnity Clubs.” Russia will struggle to export large volumes of oil without the insurance coverage required to secure its transport options, and Western officials hope Moscow will accept shipping oil at a reduced price rather than find other alternatives.

Lifelines, however, exist for the Kremlin. Former Russian President Dmitry Medvedev stated in June 2022 that the Russian government would “replace commercial insurance and reinsurance cover of oil exports by sea and the vessels that carry them in a bid to counter the European Union ban on companies providing services.” This would be similar to the measures the Japanese government took in 2012 when it provided “a sovereign guarantee of up to $7.6 billion in liability for a tanker carrying Iranian oil” to maintain trade with the country.

Additionally, “There are probably insurers in Russia capable of writing third party liability and reinsurance programs that could then be backed by a sovereign fund from China or Russia,” according to Mike Salthouse, chairman of the International Group’s sanctions subcommittee.

Indian companies also agreed to certify Russian tankers in June, raising suggestions of “a non-Western fleet with sovereign Russian or Chinese insurance and financing, and Indian certifications for the vessels.” Shipping companies and maritime services based in India, China, and the Arabian Gulf would be essential for Russia to successfully achieve this.

Russia is also using former Soviet states to bypass sanctions. In May, Ukraine accused Georgia, Armenia, and Azerbaijan of helping Russia reexport its products to international markets after more than 200 companies were established and tens of thousands of Russians settled in these countries in the months after the February invasion.

Smuggling routes through Central Asia have historically facilitated the northern drug trade route to Europe. But these routes have also allowed Central Asian states to emerge as integral entry points for Western technology sought by Russia in recent months, including microcircuits and semiconductors.

Five Russian nationals were charged with sanctions evasion in October for shipping military technologies, including semiconductors, radars, satellites, and other equipment, from U.S. manufacturers to Russia. Tens of millions of dollars were spent to supply U.S.-origin technologies for use in Russian fighter aircraft, missile systems, smart munitions, and other systems. The deals were facilitated through a mix of real and fake companies and falsified documents, while cryptocurrencies were used for the transactions and to launder the proceeds afterward.

Three Latvian and Ukrainian nationals were also charged in October for attempting to ship U.S. technology for use in Russia’s nuclear and defense industries, in violation of U.S. export controls. Though unsuccessful, the brazenness of Russian networks attempting to penetrate the U.S. points to greater success in other countries with higher bribery rates and laxer inspection policies.

Isolating Russia will also require the assistance of other major economic centers. But China has received resources from Iran, Venezuela, and North Korea in recent years in violation of U.S. sanctions, and is already pursuing the same policies with Russia. Small refiners in China are able to ignore the risk of U.S. penalties since they are “hard to reach with sanctions,” according to Anders Corr, founder of Corr Analytics.

Beijing will also look to use Russia’s isolation to increase Eurasian trade through its Belt and Road Initiative, as well as use other economic mechanisms to undermine traditional U.S. dominance. After Russian banks were blacklisted from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment-verification system, China and Russia have taken greater steps to develop their own alternatives.

This includes Russia’s System for Transfer of Financial Messages (SPFS) and the National Payment Card System (now known as Mir), as well as China’s Cross-Border Interbank Payment System (CIPS) and UnionPay.

In July, India set up a framework to conduct international trade in rupees. Vostro accounts required to facilitate this trade have been opened by Russia’s Gazprombank (with India’s UCO Bank), VTB Bank, and Sberbank, with six more Russian banks in talks to do so. A major gas pipeline deal with Pakistan, an agreement to use local currencies in trade with Egypt, and increased energy exports to Brazil in recent months have further demonstrated Russia’s attempts to diversify its economic options.

Russia’s economy will continue to face significant hurdles, particularly with the imposition of the oil price cap. While U.S. officials have stated that the aim of sanctions is to change Moscow’s behavior, Russia and other countries may double down on developing rival official trade mechanisms to the West and expanding a globalized black market with other rogue states.

Weekly US influenza cases highest on record

Benjamin Mateus

The Centers for Disease Control and Prevention (CDC) reported through its weekly US influenza surveillance dashboard that during week 47 of 2022, ending November 26, the agency received 130,584 specimens, of which 25.1 percent were positive. This translates into more than 32,600 cases of the flu in one week.

To place this number in context, the highest figure reached for the same week during flu seasons dating back to 2016 was under 5,000 (in 2019), six times lower. In fact, more positive flu tests were reported in the week ending November 26 than in any single week for any flu season as far back as 1997. 

Overall, for the 2022-2023 flu season, the CDC has estimated there have so far been 8.7 million illnesses, 78,000 hospitalizations, and 4,500 deaths. The cumulative hospitalization rate has reached 16.6 per 100,000, which “is higher than the rate observed in week 47 during every previous season since 2010-2011” according to the CDC. 

Close to 20,000 people were admitted to hospitals across the country in week 47, twice the number admitted to hospitals the previous week. These numbers are expected to continue their upward trajectory, given that nearly 55 million Americans traveled for the Thanksgiving holiday to visit friends and families. 

[Photo: CDC]

Unsurprisingly, those being admitted are both the oldest and youngest in the population, who are most vulnerable to such infections. The hospitalization rate among those 65 and older is 39.9 per 100,000 or 2.5 times the national average. For those 85 and older, that rate is at 71.3 per 100,000, more than four times the average. For those under five years of age, the rate is 28.4 per 100,000, nearly double the average.

Currently, 44 states are registering very high influenza-like illness (ILI) activity. Only Alaska, Michigan, Vermont and New Hampshire have low to minimal rates. The percentage of outpatient visits for respiratory illness reported by the US Outpatient ILI Surveillance Network (ILINET), has reached 7.5 percent of all patient visits. This figure is three times higher than the national baseline of 2.5 percent and has already reached the peak of the 2017-2018 season, set in the middle of February 2018.

[Photo: CDC]

Rates of outpatient visits for respiratory illnesses, as the figures from the CDC demonstrates, are highest among infants and toddlers, followed by young children, adolescents, and young adults. However, as the graph shows, since Thanksgiving, the rates of respiratory illnesses have turned sharply upwards for all age groups.

That rates are highest among children comes as no surprise as influenza and RSV, like COVID, are respiratory illnesses transmitted via airborne aerosols with schools, universities and day care centers functioning as vectors for the transmission of these illnesses into the communities. As with COVID, these facilities have fully opened without an iota of mitigation measures in place, propelling the current explosive and early start to these illnesses. 

[Photo: CDC]

One can peruse the recent news sites and social media to glimpse at the scale of infections afflicting schools just a month ago. On Friday, November 4, Williamstown Independent Schools in Kentucky held a “non-traditional instruction” day, due to the high number of student and staff illness. On the same day, the McNairy County school district in Tennessee closed its doors in the face of increasing illness among student, faculty and staff.  

At North Carolina’s Shining Rock Academy, doors were closed on October 28. As the social media post said, “By 1 pm today, nearly 24 percent of the school was absent, primarily due to diagnosed cases of the flu, or flu-like symptoms.” They added, “The day will be utilized to conduct a deep cleaning” of the campus.

A recent summit held at the White House on indoor air quality, led by coronavirus adviser Dr. Ashish Jha and a panel of experts, focused on the need for improving indoor air quality in schools, with the opening panel chaired by EPA’s Tracy Enger, Dr. Jesus Jara, superintendent of Clark County School district in Nevada (Las Vegas) and Dr. Alex Marrero, superintendent of Denver Public Schools. 

However, much of the discussion that followed the opening remarks centered on the massive gaps in funding that continue to block any real infrastructure initiatives to make public school indoor air quality a priority. 

Having acknowledged these obvious shortcomings, the panel on schools ended where it began with a major question mark lingering on how the Biden administration will lead on these issues. Denver Public Schools Superintendent Marrero concluded:

I’m thrilled that we’re being shined on in terms of a spotlight, but by no means does Denver Public Schools have it all figured out. I’m sure there are others that are struggling just like we are … When it comes to the matter of evaluation, the truth of the matter is there is nothing holding us accountable to doing this, and that is the scary part. I want to just let that simmer for a second, because anyone can avoid this, right? But there are competing priorities when it comes to test scores, when it comes to anything you can imagine. [These] are things we are held responsible for. It doesn’t happen at the federal level or locally. It’s a value statement for a board of education or board of trustees to say okay this is important for us.

He then highlighted the difficulties schools faced during COVID and the teacher shortages that are impacting school operations and student learning. Indeed, the pandemic has laid bare deeper issues confronting public education in the United States, including the long-term decline of air quality in aging school facilities.

Dr. Joseph Allen, director of the Healthy Buildings program at Harvard University, who gave the opening remarks at the summit after Dr. Jha, highlighted the dilapidated conditions of poorly ventilated schools that are on average more than 45 years old, with HVAC systems outdated and in need of urgent repairs. In March 2022, he told NPR, “I don’t think a lot of people recognize that the design standards [that govern ventilation rates in schools and other buildings] are bare minimums. They were never actually set for health.” 

On Monday, the CDC Director Dr. Rochelle Walensky spoke with reporters. Walensky has done everything in her power to end all the COVID mitigation measures since being sworn into her current position by Biden. But with a straight face she said her message to Americans was, “We also encourage you to wear a high-quality, well-fitting mask to prevent the spread of respiratory illnesses … One need not wait on CDC action in order to put a mask on.”

Around 25 percent of all adults and 40 percent of children have received a flu shot this season. Additionally, only 15 percent of all adults eligible for the bivalent COVID booster jabs have taken them. In fact, most Americans have essentially abandoned the preventive measures that proved effective in slowing COVID. This is the result of the deliberate systematic anti-public-health policy promoted by both the Trump administration and now the Biden administration.

Meanwhile, the rise in hospitalizations is accompanied by shortages of medications to treat complications associated with viral respiratory illnesses. Specifically, antibiotics like amoxicillin are in short supply. Cold medicines and antivirals are difficult to find. Staffing shortages at health systems are exacerbating the ability to treat the sick. 

Flu seasons usually peak during the deep winter months. The extremely high figures reported by the CDC in late November portend a crushing wave of respiratory illnesses on the horizon.

Hertz rental company ordered to pay millions to customers falsely accused of auto theft

Matthew Taylor

The car rental company Hertz agreed in court on Monday to pay out $168 million to customers it had falsely accused of theft over the course of the past several years. The settlement covers multiple lawsuits filed by 364 separate customers, many of whom were arrested and, in some cases, incarcerated for as long as six and a half months before their cases were resolved.

This May 23, 2020, photo shows rental vehicles parked outside a closed Hertz car rental office in south Denver. [AP Photo/David Zalubowski]

Most of the cases involved false police reports filed by the company claiming that customers had failed to return vehicles on their due date when in fact they had paid to extend their rental period and had documentation to prove it. In some cases, customers driving rented vehicles which had previously been reported stolen and then returned to the company were arrested based on the outstanding police report.

The New York Times reported that one of the plaintiffs in the lawsuit, a Gwinnett County, Georgia man, turned himself in to authorities in 2018 when he learned he had an outstanding theft warrant for a Hertz car that he had paid for and returned. After missing a subsequent court hearing, he was jailed for six and a half months before the case was resolved. In April of 2019 another Hertz customer in Broward County, Florida, spent 37 days in jail on theft charges that were later dismissed.

Many of the plaintiffs were poor workers who lacked the resources to post bond or hire private attorneys. In some cases, those arrested had been renting cars to make extra money driving for rideshare companies like Uber and Lyft. One customer spent nine nights in jail after police arrested her at gunpoint in front of her children before charges were dismissed. Another spent two weeks in jail, suffering multiple panic attacks and assaults by other inmates before her case was dismissed and she was released. Another victim in Colorado was arrested and then released for theft of a rental car in Georgia, though he had never rented a car from the company and had never visited that state.

Hundreds of other Hertz customers reported similar experiences.

In many of the cases cited in news reports, Hertz customers provided or offered to provide documentation to prove they had paid for their rentals at the time of their arrests but were detained anyway. A Philadelphia area contractor cited in one report was arrested in June 2019 even though he provided bank statements showing he was up to date on his rental payments.

Court records show that over the past four years, Hertz filed roughly 8,000 police reports each year. Nearly 3,500 of those reports were for “theft by conversion,” or customers allegedly not returning vehicles they had rented.

Reports of Hertz customers being falsely charged with theft from the company reach back to at least 2008. A South Carolina Hertz customer who filed suit against the company in 2019 was provided with a database from the company showing that in the period between 2008 and 2016, over 300 similar complaints were filed by customers. 

Though a full accounting of how this transpired has not yet emerged, it is apparent that the company was, at a minimum, criminally negligent in maintaining accurate records of its rentals, which led to many arrests, including after the initial lawsuits had been filed. The company also failed to withdraw police reports of stolen vehicles after discovering that the vehicles had been paid for or returned.

This week’s settlement comes after the company spent years denying wrongdoing. In comments made to the Philadelphia Enquirer on the case in 2020, a Hertz spokesman stated that the reports of theft were accurate when filed and that “it’s up to law enforcement to decide what to do with the case.”

In March of 2020, Hertz, already billions of dollars in debt, fired 12,000 employees and furloughed another 4,000. In May of that year the company filed for bankruptcy protection when the outbreak of the Coronavirus pandemic and the implementation of travel restrictions slashed their revenues.

The company had sought to dismiss the various lawsuits brought by its customers through the bankruptcy proceedings. After a hearing in November of 2021, a spokesperson for the company gave a statement to CBS stating, “Unfortunately, in the legal matters being discussed, the attorneys have a track record of making baseless claims that blatantly misrepresent the facts, the vast majority of these cases involve renters who were many weeks or even months overdue returning vehicles and who stopped communicating with us well beyond the scheduled due date. Situations where vehicles are reported to the authorities are very rare and happen only after exhaustive attempts to reach the customer.”

Hertz was forced to contend with the lawsuit after the bankruptcy court judge refused to dismiss the case and ordered the company to unseal records of theft claims. After emerging from bankruptcy in June of 2021 the company continued to fight the charges in court. As further reports of Hertz customers being arrested on false charges continued to pile up in the following months, the company began to indicate that it would settle the lawsuits. In March of this year, Democratic Senators Elizabeth Warren and Richard Blumenthal began calling for congressional hearings on the matter.

In a statement posted on its website in the aftermath of the settlement a spokesperson for Hertz glibly evaluated the impact the payout will have on the company after destroying hundreds of lives, stating, “Hertz does not expect the resolution of these claims to have a material impact on its capital allocation plans for the balance of 2022 and 2023.”

A glimpse into what Chinese workers think about COVID restrictions

Lily Zhao

Last weekend, protests erupted across major cities in China. These relatively small protests, largely drawn from middle class layers, were dominated by demands for an end to the official Zero-COVID policy and the abolition of mass testing, quarantining and lockdowns. Their slogan of “We want freedom” reflected their hostility to necessary public health measures that infringes on their lifestyle and in some cases, their business interests. The ending of Zero-COVID, which the Chinese government is now implementing, will only result in a social disaster—mass infections, deaths in the millions and many more cases of Long COVID.

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

The voice of the working class rarely has a major presence on Chinese social media and especially in the online discussions about the Zero-COVID policy. Two posts from workers in different parts of China paint a very different picture from the blanket coverage in the US and international media falsely painting last weekend’s protests as the voice of the people. Despite the hardships entailed, workers are very conscious of the dangers of infection and are supportive of necessary measures to prevent it.

Food delivery workers in Beijing

A food delivery worker under Meituan, one of the two largest food delivery platform in China, made a post on social media about two weeks ago.

The residential compound in which they had been living was put under lockdown on the morning of November 20 and no one was allowed to enter or exit. A number of food delivery workers decided to stop living there and left the compound before the lockdown was put in place. They were worried about losing their only source of income if they stayed in there, which is what happened last time when the compound was put under lockdown for a week.

Along with 15 other delivery workers, they had been homeless ever since. As the worker described in his post, “Some of us has been living at food delivery stations and some at cheap hotels, but most of us have been sleeping on hallways of office buildings or entrance way to restaurants.” Temperatures in Beijing in late November reached below freezing point in the evenings. Most of these “lodging” places had no heating.

However, even these options were becoming unavailable. The worker continued, “As restaurants in Beijing moved to stop dine-in services, they would not let people [sleep] there anymore. As most people started working remotely, office buildings were harder to get into as well.” Most working class neighborhoods where cheap short subleases could be found had been under lockdown as well and hotels were just too unaffordable.

The worker made this post only to plead for a place to sleep at night at an affordable price. And their plight was shared by many food delivery workers who did not want lose their income because of lockdowns and chose to be homeless.

In an interview with another group of food delivery workers entitled “Food delivery workers attempting to get some sleep on cold nights under COVID”, workers camped in office buildings and slept on the floor near a bathroom because it had the most residual heat. If the weather got colder, they switched from beer to liquor to warm up. Sometimes a couple workers huddled under a single blanket. Despite having a “roof” over their head, they constantly ran the risk of losing their belongings. The interview summarized, “during that cold night of -10, what accompanied them were stomach medicine, alcohol and snores from fellow delivery workers.”

Despite the extremely difficult conditions imposed on them by lockdown measures, the sentiments among workers were very different from the middle class layers demanding “freedom.” In the social media post, the delivery worker asking for help, he stated, “We have been homeless for days, but we still get a PCR test every day and follow all COVID-related measures. We left the residential compound before it was put under lockdown only because we don’t want to lose our only source of income.”

Coal miners in Yangquan, Shanxi

On November 28, a coal miner from Yangquan, a city in the coal-rich Shanxi Province in northern China, made a post on Weibo that started with “HELP!!!!” The miner worked at Yangquan No.5 Coal Mine under Shanxi LuAn Group, one of the seven major coal mining companies in the province. The city of Yangquan also produces the highest quantity of anthracite in the country.

Since November 18, as the number of infections in Yangquan had been on the rise, a few thousand workers were required to stay at dormitories at the mine so that they would not run the risk of being quarantined at home and to keep production going.

No proper quarantine measures were in place at the mine to separate workers who tested positive. Sometimes a worker who tested positive would be handed a hazmat suit but would not be transferred out of the dorm. More than a dozen workers were crammed into a single dorm room with hardly any furniture or appliances outside of beds and a water fountain. Living space was so limited that some workers had to sleep on the floor of the shower. This only led to a further transmission of the virus among miners with many having a fever.

Living conditions were terrible. There was a shortage of food. The miner who made the post reported that “the food they were able to have for a whole day was even less than what they usually had for a single meal.” He also posted a boxed meal they were provided, where there was only rice, shredded potato, shredded carrots and “two or three shreds of meat.” This meal was brought to them around 6 p.m. and it was their lunch. Workers who were ill were not taken care of, as medicine was in short supply. Some workers with a high fever only had insta-ramen to eat. Despite all the harsh conditions, workers were kept on the job.

The worker commented in his post, “in order to meet the coal demand around the country, workers conduct high-risk work in the mine on a daily basis. But when workers are in need of warmth and security the most, where would they get warmth and support from?

“Yangquan is a small city most people probably have never heard of, but it has the largest anthracite production in the country, sending warmth to many places across the country. Please do not just remember us when you feel cold. When we confront a harsh winter, we need others to put a warm coat around us as well.”

After this post spread on social media, the company finally transferred workers who tested positive into local or the nearby Fangcang hospitals and started to provide more supplies to workers remaining at the mine.

What happened at this coal mine was similar to conditions facing workers at the Foxconn factory in Zhengzhou, the largest iPhone factory in the world. Foxconn workers were put under a similar “closed-loop” management without an effective separation of those who contracted COVID. This led to a mass exodus in October and a protest by thousands of mainly newly-hired workers in mid-November over non-payment of bonuses, poor food and being forced to work and sleep alongside workers who had tested positive. The sole concern of management, as at the coal mine, was production and profits.

Many workers have faced great difficulties as a result of the Zero-COVID policy. For temporary workers, who are mainly rural migrants, a day in quarantine means a day without pay. And for those working on assembly lines, they are forced to stay on the job often without basic life and medical supplies.

However, food delivery workers, coal miners, workers on the assembly lines of Foxconn and many more understand that these COVID restrictions are necessary to prevent mass infections and deaths. The social media posts by workers are not calling for “freedom” from Zero-COVID, but for housing, proper food and measures to stop the spread of infections.

The hardships are not the result of the Zero-COVID policy itself. Rather what is highlighted is the need for workers to be provided proper living and financial assistance from the government and employers. Workers should not have to choose between putting meals on the table and running the risk of being infected.

The Chinese government’s Zero-COVID policy over the past two years has demonstrated elimination of the virus is possible, but only if implemented internationally. Now confronted with enormous pressures internationally and from sections of business and the middle class at home, the regime is rapidly dispensing with the very measures that have proven effective in suppressing the virus.

As infections and deaths soar, it will inevitably be the working class that is hit the hardest. Employers at Foxconn and coal mines as well as countless other workplaces will take the easing of COVID restrictions as the go-ahead to end even the limited measures now in place to prevent infections.

Large-scale raid against right-wing terrorist network reveals the extent of the fascist danger in Germany

Peter Schwarz

One of the largest police raids in the history of the Federal Republic of Germany took place on Wednesday. Around 3,000 officers from the special police forces stormed 137 locations in 11 federal states on Wednesday morning and arrested 25 people. Another 27 people are being investigated. The state prosecutor has accused them of being members or supporters of a terrorist organisation, and the searches are ongoing.

“The arrested accused belong to a terrorist organisation founded at the end of November 2021 at the latest that aimed to overturn the existing state order in Germany and replace it with its own form of government,” said a statement by the Federal state prosecutor. “The members of the organisation are aware that this project can only be realized through the use of military means and violence against state representatives. This includes the commission of homicide.”

It was not Nazis with bald heads and boots who were arrested but members of high society. Prince Reuss Heinrich XIII was charged by the federal state prosecutor as the ringleader. Prince Reuss is a Frankfurt real estate agent and descendant of a Thuringian noble family who ruled the Vogtland region for 700 years, while another leading suspect is the former paratrooper commander Rüdiger v. P., who led the organisation’s “military arm.”

Among the detainees are also a lawyer with a doctorate, a doctor, a pilot, a classical tenor, the Berlin judge and former Member of Parliament for the far-right Alternative for Germany (AfD) Birgit Malsack-Winkemann, as well as other former elite soldiers, including the former elite special forces (KSK) Colonel Maximilian E. The locations searched included the barracks of the KSK in Calw, Baden-Württemberg, which was already a centre of the right-wing terrorist Hannibal network.

The state prosecutor accused the terrorist network, which it identified as part of the Reichsbürger (citizens of the Reich) milieu and an advocate of QAnon ideology, of concrete coup plans and advanced military preparations. These charges were based on investigations by the Federal bureau of criminal investigations (BKA), which has been monitoring and intercepting the communications of the accused since the beginning of September, with the involvement of several hundred officers. Accounts were also screened and chat groups monitored.

According to the Federal state prosecutor, a “council” chaired by Reuss “has regularly met in secret since November 2021 to plan the intended takeover of power in Germany and the establishment of its own state structures.” Reuss was to be the future head of state, and other members were to be responsible for various ministries, including 'justice,“ “external affairs,” and “health.”

A suspect, second right, is escorted from a police helicopter by police officers after the arrival in Karlsruhe, Germany, Wednesday, Dec. 7, 2022. Thousands of police officers carried out raids across much of Germany on Wednesday against suspected far-right extremists who allegedly sought to overthrow the government in an armed coup. [AP Photo/Michael Probst]

The “council” was affiliated with the “military arm,” some of whose members had “actively served in the military (Bundeswehr) in the past.”

“This part of the association is responsible for enforcing the planned seizure of power by force of arms,” noted the prosecutor. This should be done “via a system already under construction, known as ‘Homeland Security Companies’.”

The leading staff of the “military wing,” headed by Rüdiger v. P., “dealt with, among other things, the recruitment of new members, the procurement of weapons and other equipment, the establishment of an interception-proof communication and IT structure, the conducting of shooting exercises and plans for the future accommodation and catering of the ‘Homeland Security Companies’.” The “focus of the recruitment efforts” was “especially on members of the Bundeswehr and police.” Several meetings were held in the summer of 2022 to implement this objective.

According to the previous investigations, “there is also a suspicion that individual members of the association have made concrete preparations to forcefully penetrate the German Bundestag (federal parliament) with a small armed group.” The coup attempt by Donald Trump on January 6, 2021 clearly served as a model.

Politicians and the media celebrated the raid against the terrorist network as the triumph of a “democracy on guard” (Minister of Justice Marco Buschmann, Free Democrats) and a successful “commitment to the protection of our democracy”(Minister of the Interior Nancy Faeser, Social Democrats).

The right-wing daily Frankfurter Allgemeine Zeitung regarded the blow against the group as “a sign that accusations that the security forces are blind to right-wing threats are absurd.” Apart from this, the newspaper sought to evade the issues. “Taking these people seriously would be too much of an honor,” writes FAZ Editor Jasper von Altenbockum. “Despite the monstrous intentions of the group around ‘Heinrich XIII P.R.’, we should retain a sense of proportion. The conspirators lacked any basis for success.”

In reality, the group’s activities underscore how much the far right and its ideology have penetrated the state apparatus and ruling circles, which work to conceal the fascist threat.

The claim that the group was formed only a year ago is simply not credible. Their connections to the AfD, the Reichsbürger milieu and terrorist groups such as the Hannibal Network, which the security forces left largely intact despite detailed journalistic exposures, are too obvious.

Hans-Georg Maassen, who advised and protected the AfD and shared its xenophobic ideology, headed Germany’s secret service for eight years. The National Socialist Underground trio was able to kill its victims undisturbed for years while its members were surrounded by intelligence agents. The murderer of the Kassel regional President Walter Lübcke came from the NSU milieu and was known to the authorities as a criminal right-wing extremist.

Even the presumed ringleader of the uncovered group is no stranger. The intelligence agencies have considered the prince from the Vogtland to be part of the Reichsbürger milieu for years. “His speeches were saturated with anti-Semitic, anti-democratic and conspiratorial statements,” writes Die Zeit.

In 2019, Reuss gave a highly acclaimed lecture at the Zurich Worldwebforum, which made him the star of the far-right milieu. He accused the Jewish Rothschild family of having financed wars and revolutions to eliminate monarchies. The aim of the First World War was, among other things, to “promote the spread of the Jewish population,” according to Reuss.

Reuss is suspected of having financed the right-wing terrorist group. In 1998, he auctioned off antiques, furniture, jewelry and paintings worth 3.5 million marks, which had been restored to the noble family following the end of the German Democratic Republic (GDR). Reuss also filed numerous lawsuits for the restitution of real estate, palaces, forestry and agricultural property to the feudal ruling family but lost all of them.

The case of Birgit Malsack-Winkemann shows particularly clearly how the judiciary and security forces protect right-wing extremists. The judge at the Berlin Regional Court joined the AfD in 2013 and was elected to the Bundestag in 2017. When she lost her mandate in 2021 and returned to the judiciary, the Berlin judicial administration first tried to remove her from service. But the Judicial Service Court ruled in favour of the reappointment of the right-wing extremist.

On October 13, 2022, long after the BKA had begun investigating Malsack-Winkemann’s involvement in the formation of a terrorist organisation, the judges ruled according to the press statement of the court: “The transfer of a judge to retirement requires a serious impairment of the administration of justice, which cannot be ascertained here. ... Public confidence in the person of the judge must have been damaged to such an extent that the case-law of the judge no longer appears credible; remaining in office must also have affected public confidence in an independent and unbiased judiciary. There were no sufficient facts for this conclusion.”

The judges were also not impressed by the fact that Malsack-Winkemann maintained contact with the far-right “Wing” faction of the AfD, made racist statements about refugees and participated in the Berlin “lateral thinkers” demonstration against COVID-19 public health measures in August 2020, during which far-right forces occupied the entrance to the Bundestag.

The court described the racist hate speech against migrants as a slip of the tongue, explains the legal scholar Andreas Fischer-Lescano on the “Constitutional blog.” “Just because of the ‘xenophobic attitude‘ that emerges in these statements (the court avoids the word racism), ‘it cannot be concluded in any case that the respondent’s attitude is anti-constitutional’,” writes Fischer-Lescano, quoting from the judicial ruling.

The Judicial Service Court is part of the Berlin Administrative Court, which rejected the Socialist Equality Party's lawsuit against the Federal Ministry of the Interior in November 2021. The SEP had demanded that the secret service remove it from its annual report and stop defaming it as a “left-wing extremist” organisation and monitoring it with the secret service.

The court justified its decision against the SEP on the grounds that its demand for “an egalitarian, democratic and socialist society” was contrary to Germany’s Basic Law. This ruling could not have more clearly shown the court’s right-wing and authoritarian attitude. The AfD’s far-right politics and racism are compatible with the constitution, but the demand for a democratic and socialist society is not!

Ultimately, the ruling class’ shift towards far-right authoritarian forms of rule, which is also evident in Italy, the US and many other countries, is a reaction to the deep crisis of the capitalist system. Just as they did 90 years ago, the rulers are responding to the intensification of social tensions and the growth of the class struggle with militarism and dictatorship. As they work with fascist forces in Ukraine to wage their proxy war against Russia, they systematically build up far-right networks in the state apparatus to suppress any resistance to their right-wing policies from below.

Ukraine threatened with total blackout

Andrea Peters

All of Ukraine could be plunged into a total blackout in the coming weeks, experts say, as Russian air assaults targeting energy infrastructure continue. Already, 50 percent of the country’s power system has been damaged or destroyed. This number does not take into account the impact of missile strikes this past Monday which Moscow ordered in response to Ukrainian drone attacks inside Russian territory.

Should the speed of the bombing intensify, the entire country “would be without electricity, water, and heating” for a period of about three to 10 days, said Olexander Kharchenko, director of the Energy Industry Research Centre, in a recent interview with Human Rights Watch. A representative from Ukraine’s Mercy Corps echoed his warning, telling Newsweek that Ukraine’s “entire national grid could collapse within weeks” if there is no let-up to the violence.

Currently, large parts of Kiev, which has already been experiencing rolling blackouts for well over a month, as well as Zaporizhzhia, Odessa, Sumy, Zhytomyr and Kryvyi Rih, are reporting total outages due to Monday’s missile strikes. In many cases, residents have also lost water, because plumbing and waste treatment systems cannot operate without electricity. The neighboring country of Moldova, whose energy infrastructure is connected to Ukraine’s, is likewise experiencing power losses.

As of just mid-November, 10.7 million people, about half of the population that has remained in the country, have gone without one or more essential utility for at least some period of time, if not permanently. The danger of widespread and life-threatening hypothermia is growing, as temperatures plunge during the winter months. A total blackout that lasts even just a few days could result in the deaths of hundreds, if not thousands. As if the weather was a thing totally unpredictable to the most powerful governments and agencies on earth, the US, its allies and the UN are reportedly now “scrambling” in order “to get blankets, insulation, generators, medical supplies,” reports ABC News.

Ukraine’s health care system, which has been gutted by right-wing reforms implemented at the behest of the EU and foreign lenders, is buckling under the weight of the energy crisis. Surgeons are working with the aid of flashlights, headlamps and cellphone illumination. Workers are struggling to keep x-ray, breathing, ultrasound and dialysis machines functioning. Vaccines are spoiling in refrigerators that are no longer cool.

This week the health ministry recently declared a halt to all surgeries deemed “non-essential,” in order to alleviate the burden on medical facilities with limited, temporary power-generating capacity. One of the country’s largest hospitals was recently on the verge of having to evacuate patients recently because its water supply failed.

Even though medical workers are laboring under desperate conditions, some report not being paid for months. Despite the war, the Ukrainian government has refused to fully suspend changes to health care spending that were implemented in 2018 as part of a series of EU, IMF and World Bank deals. According to the new policies, hospitals are paid in proportion to the number of patients they treat, regardless of the expenses associated with keeping their doors open. The impact of this prior to the war was the widespread closure of medical facilities, particularly those outside of major population centers, where there are, in essence, fewer “customers.”

In July, Kiev officials declared that state financing for any hospital not in the “conflict zone” would still be based on per-patient remuneration, thereby providing these facilities no relief. Currently, financially strapped institutions are treating patients but unable to pay their nurses and doctors.

At the Ivano-Frankivsk Regional Infectious Diseases Clinical Hospital in western Ukraine, 80 staff staged a protest in early November because, apart from a one-time $5 payment, they had not received their salaries since August. They told the press that the conditions they face now are no better than they were during the height of the COVID-19 crisis. Another 36 employees from the clinic have no wages and will never be receiving any, as they were laid off over the course of year due to “budget optimization.”

Despite much public handwringing over the terrible conditions facing ordinary Ukrainians, Western governments’ response can be described, at best, as pathetic. The United States announced last week that it is sending Ukraine just $53 million in additional energy-related aid, bringing its total spending on the support of life-sustaining power infrastructure and supplies to about $106 million. In contrast, Washington has allocated nearly $24.2 billion in one or another form of military aid to Ukraine, including $19.5 billion in weaponry and equipment, according to the Kiel Institute’s Ukraine Support Tracker (UST).

With humanitarian aid from Washington standing at about $10.4 billion, the US has spent about 2.3 times more on facilitating the killing of Ukrainians than it has on saving them. The EU is only slightly better, with a death-to-life spending ratio of about 2:1.

In terms of its support for Ukrainian refugees, as a percentage of its GDP, the US has spent so little that you cannot even see it on the visual graphic of per country refugee support published by the UST.

While the US and the EU have committed respectively about $15.9 and $31.8 billion in financial aid, most of that has yet to be disbursed. Large amounts are coming in the form of loans not grants, and many have various strings attached that require Ukraine to implement one or another pro-market “reform,” i.e., privatization, spending cuts or other measures that will make the rich of the world even richer.

In addition, a portion of the money foreign states and institutions are providing the country is simply being used to pay off debt it owes to these very lenders. A December 5 comment published by the Carnegie Endowment for International Peace noted that the IMF has refused to defer Ukraine’s debt repayments, such that Kiev was “on track to pay back more than it was receiving from the IMF in 2022.”

With a small change made in October as part of the IMF’s emergency financing program known as the Food Shock Window, the situation shifted slightly. By the end of 2022, Ukraine will have received $2.7 billion in aid from the IMF and paid it $2.4 billion, accumulating in the process another $300 million in debt. In comparison to the IMF, other creditors did Ukraine a kindness and granted the country in August—five months after the war began and its treasury was bled white—a two-year freeze on its Eurobond payments.

Europe’s welcome mat for Ukraine’s 7.9 million refugees is now also being rolled up. The UK’s Homes for Ukraine program is in total crisis, and 14,000 Ukrainians are facing homelessness by Christmas because the government has refused to provide either public housing or adequate aid to British host families. Already, nearly 3,000 refugees, overwhelmingly women and children, are without shelter.

Local officials across Germany are telling the federal government that they no longer have either the facilities or the financial resource to sustain, much less take more, refugees. In Berlin, a tent city near the airport was erected for 3,600 refugees, with little prospect of any sort of permanent housing being provided.

Belgian officials are turning away Ukrainian refugees seeking help with housing. Poland is now charging those staying in government-sponsored facilities for more than four months a daily housing rate. Estonia, uniquely distinguished for its anti-Russian, war-crazed government, declared Tuesday it will not accept any more Ukrainian refugees.

Latvia is imposing a language requirement on those arriving in the country, which as one immigrant advocate pointed out, will simply be used as a means to discriminate against Ukrainians who, despite their desire, cannot learn Latvian because language courses are nowhere to be found.

Hundreds of thousands of Ukrainians are expected to seek entry into Europe during the winter. In addition to telling those currently outside the country not to return, authorities in Ukraine are encouraging those still in the country to leave due to the energy crisis. “If they can find an alternative place to stay for another three or four months, it will be very helpful to the system,” said the chief executive of Ukraine’s largest power supplier, Maxim Timchenko in November.

UK government mounts state offensive against striking workers

Robert Stevens

Britain’s Conservative government is preparing to use the armed forces against a growing strike movement. In the next weeks, strikes will be held by hundreds of thousands of nurses, ambulance staff, highway workers, airline workers and civil servants, alongside ongoing national strikes by postal and rail workers.

The struggle by workers in Britain is an advanced expression of a developing movement of the working class internationally. In every country, workers are fighting back against the demands by governments and corporations that they sacrifice their living standards, working conditions, pensions and jobs. This demand is to enable the shoring up of record profits and the funneling of tens of billions of pounds, dollars and euros to cover the cost of the bailouts of big business during the pandemic, and the upscaling of military budgets amid an escalating war by US and NATO against Russia in Ukraine.

Last week a general strike was held in Italy, the second this year, involving workers in all industries, including Trenitalia and Trenord rail workers. In November, there were general strikes in Belgium and Greece and a mass strike in France. Greece’s general strike was also the second this year.

Last week, Belgian rail workers held a three-day strike, following strikes by refinery workers in France and the Netherlands.

Nadhim Zahawi, Tory party chairman, told Sky News’ Sophy Ridge on Sunday that the government “ha[s] contingency plans in place. … We’re looking at the military, we’re looking at a specialist response force ... surge capacity.” Troops could be “driving ambulances” and working on UK borders during strikes. Echoing the denunciation of striking railworkers this summer as “Putin’s stooges,” Zahawi urged nurses not to strike to “send a very clear message to Mr. Putin” that “This is not a time” for the UK “to be divided.”

The Cabinet Office acknowledged that around 2,000 military personnel and civil servants are being trained to support a range of services in the event of strike action. Downing Street’s threats were made in anticipation of Tuesday’s announcement that more than 10,000 ambulance workers are to strike on December 21 and 28. Like all National Health Service workers, they are being offered a miniscule pay deal while inflation surges above 14 percent.

The ambulance strike will follow that of around 100,000 nurses planned for December 15 and 20. Tens of thousands of firefighters are being balloted to strike, with the result to be announced in January.

This week cabinet ministers are gathering in Downing Street for a series of Cobra meetings, dealing with national emergencies or major disruption. The Times reported Wednesday, “Ministers are holding talks today about calling in armed forces personnel to drive ambulances after unions called the first nationwide strike action by paramedics in three decades.

“The Department for Health and Ministry of Defence are holding discussions ahead of a potential formal request for help under the military aid to civil authorities protocol, or Maca.”

BBC Political Correspondent Nick Eardley tweeted Wednesday that when Downing Street was “asked about [the] option of banning strikes for ambulance workers,” this was “not explicitly ruled out.”

On Wednesday, Prime Minister Rishi Sunak told Parliament he was preparing “new tough laws” to combat strikes. The Sun newspaper, owned by Rupert Murdoch, reported last week that the government planned to “rush through an anti-strikes Bill” that “would open a new front in the Government’s war with health, rail and postal unions among others.” The “package may include using agency workers to fill strikers’ crucial roles and making it easier for bosses to replace strikers permanently.” This “would add to legislation currently going through Parliament to ensure a minimum level of service on strike days in key industries, such as rail.”

Minimum Service Levels (MSLs) legislation would require rail unions to guarantee that at least 20 percent of trains run during strikes or face a £1 million fine.

This assault on workers’ rights is also a universal response by the ruling class internationally. Last week US President Joe Biden’s Democratic Party administration signed into law a dictatorial bill passed by Congress to impose a national rail contract rejected by tens of thousands of railroaders, outlawing strike action.

Minimum services legislation is already widely used across Europe and has spearheaded a turn to direct state repression to enforce brutal austerity, ever since the 2008 global financial meltdown.

In 2010 this saw Spain’s Socialist Party government force 2,200 air traffic controllers back to work at gunpoint to smash a wildcat strike. Armed soldiers stood over them with the threat of immediate arrest should they stop work.

This summer Spanish airline and metal workers were subjected to minimum service orders by Spain’s Socialist Party (PSOE)-Podemos government, and Ryanair imposed a minimum service requirement preventing many workers from legally stopping work. The previous month, Hungary’s far-right government imposed minimum service levels, preventing most teachers from joining strikes.

In October, the Macron government in France requisitioned striking refinery workers to force them back to work and break a powerful action hitting the arteries of the economy.

As it prepares the ground for a state offensive against Britain’s working class, the Tory government is depending on the trade union bureaucracy to deepen its ongoing efforts to police and suppress demands for broader strike action.

For months the trade union leaders have done everything in their power to isolate and contain strikes by rail, postal, telecoms and university staff and prevent them from coalescing into a general strike. Last week the Communication Workers Union bureaucracy agreed with British Telecom to a well-below inflation pay settlement for 40,000 workers, aimed at ending one of the four ongoing national strikes. Talks are held continuously between the government and the rail, education and health unions in the hope of imposing a similar rotten agreement.

The threat of anti-strike legislation is not directed against the bureaucracy but aimed at providing it with ammunition to use against rank-and-file trade union members. Over the last four decades, the Trades Union Congress and its affiliated unions have refused to challenge the many anti-strike measures imposed by successive Tory governments, including the outlawing of secondary action that makes a general strike illegal. The trade unions would respond to the use of the armed forces and the imposition of MSL orders by insisting that the law must be upheld and strike action called off.

China’s COVID Uprising

Mel Gurtov

Significant dissent in China reared its head for the first time since the Tiananmen uprising in 1989. In many of China’s major cities, protesters joined hands to denounce the COVID restrictions and, though not in all cases, also denounce the Chinese Communist Party and its leader, Xi Jinping.

Western media tended to emphasize the latter agenda, pushing the possibility of regime change to the top of the news when in fact that theme was not the dominant one among the demonstrators.

It seems that young people, especially students, were mainly the ones calling for Xi to step down, whereas most everyone else focused on easing quarantines and returning to something resembling normal life. Neither in size, breadth of support, geography, or political impact were these protests anything like Tiananmen.

Predictably, China’s security apparatus is responding by cracking down on anyone who seemed to be leading the protests. But there really are no leaders, just fed-up people.

The real question is how lasting the protests might be, and whether or not they will evolve into mass resistance. That seems increasingly unlikely: Beijing is now easing COVID restrictions, as I’ll discuss in a moment, putting pressure on protesters either to keep going or claim a small victory and disperse.

“It’s like some national subconsciousness that resurfaces,” said Geremie Barmé, a New Zealand scholar. “Now it’s resurfaced again, this projection of self and of rights and ideas.”

She was referring to comments on China’s internet about civil liberties, democratic values, and freedom of movement. For some time, amidst a repression that has become the hallmark of the Xi era, these ideas have rarely surfaced, confined to small discussion groups of intellectuals and students.

But it’s questionable how much the general public shares such sentiments; their concern is more likely about the arbitrary rules governing zero-COVID that have forced them into isolation and considerable disruption to their daily lives. They have actually been fighting those restrictions for a long time in their neighborhoods.

The Xi Jinping leadership may appear finally to be listening to the complaints, though that would be very much out of character. “Frustrated students,” Xi says of the protesters, perhaps recognition that he needs to respond to their anger.

Most likely to dictate Xi’s response is the severe impact on China’s economy of the zero-Covid policy and the protests. Suddenly, public health officials are saying the threat from the Omicron variant is fading and China’s zero-Covid policy is working, allowing for an easing of the rules.

New regulations have been issued that promise quarantining at home rather than in some horrendous camp. Lockdowns of businesses are ending in some cities. Mass testing will be reduced. The Foxconn plant that produces Apple products seems to be resuming production after protests over wages and work conditions.

I can only speculate about the long-term consequences of the protests, which may wither or resurface depending in part on whether the party really is ready to abandon zero-COVID. At the least, the protests have considerably dented Xi Jinping’s reputation and the durability of his leadership at the very moment of triumph in extending his rule at the 20th Party Congress.

It is now clear that many Chinese do not approve of his rule, and a safe prediction is that such disapproval is shared by some among the political elite. Given his stubborn character and unrelenting search for enemies since he took command in 2012, he might authorize another wave of repression such as he has previously carried out against corrupt Party officials, dissident human rights lawyers, ethnic groups, and pro-democracy advocates.

Moreover, Xi’s ability to deliver on a serious dialogue with the US on climate change and other global issues may be undermined. As always, we shall have to wait and see.

From Mao to now, what China’s leaders have most feared is organized resistance that would challenge the party-state’s monopolization of power. That is not what we are witnessing today, though the protesters’ display of a blank sheet of paper recalls Mao’s dictum that “on a blank sheet of paper, many beautiful characters can be written.”

He meant, a revolution. As Nicholas Kristof writes in the New York Times (November 30),

“Historically in China, mass protests have arisen not when conditions were most intolerable (like the famine from 1959 to 1962) but when people thought they could get away with them, such as the Hundred Flowers Campaign of 1956, the April 5 incident of 1976, the Democracy Wall easing of 1978-79, the student protests of 1986 and Tiananmen in 1989.”

Students and intellectuals were pivotal to all those protests. Even when unsuccessful at transforming China’s political system, they signaled that democratic thought was alive under very harsh authoritarian rule.

Xi’s zero-COVID policy has been a strategic mistake from which he may never recover—especially if the high number of cases we’re seeing continue to rise as he resists foreign-made vaccines and fails to attend to the poorly protected elderly population.