Facing bankruptcy, Pakistan government unleashes brutal IMF austerity on flood-devastated population

Sampath Perera

Pakistan, the world’s fifth most populous country, with more than 230 million inhabitants, is teetering on the brink of financial default. Its fast-depleting foreign currency reserves are currently around $3 billion, which is less than the cost of a month’s imports. Despite the approach of general elections, Prime Minister Shehbaz Sharif and his interim coalition government are implementing the International Monetary Fund’s socially devastating diktats in the hopes of convincing it to release the next tranche of a loan agreement and avert state bankruptcy.

The IMF suspended a $1.1 billion loan tranche last September following the government’s failure to meet its demands in full. Amid widespread fears within ruling circles that further austerity and privatizations could trigger a social explosion like that which erupted in Sri Lanka last April, the government last week implemented a series of preliminary measures demanded by the IMF as a condition for resuming talks.

An IMF team visited Islamabad on January 31, after the rupee was allowed to depreciate more than 7 percent in value last Thursday. By Monday, Pakistan’s currency had fallen further to 270 rupees to the US dollar. At the beginning of 2022, just over 175 rupees were equivalent to $1, meaning Pakistan’s currency has lost more than 50 percent of its value in just over a year.

Petrol and diesel prices were increased by 35 rupees per litre on Sunday, reaching new record prices of 249.8 and 262.8 rupees per litre respectively. These government-mandated price rises will have a knock-on effect on the cost of food and other essentials.

Even before the pandemic and the price-shocks caused by it and the US-NATO war in Russia, Pakistan had among the highest child malnutrition rates among so-called developing countries. According to a National Nutrition Survey from the last decade, nearly 44 percent of all Pakistani children are stunted and 15 percent are wasted. [Photo: Borgen Project]

In an interview with the Financial Times last week, Planning Minister Ahsan Iqbal voiced his fears of mass social unrest if the IMF’s demands were carried out in full. “If we just comply with the IMF conditionalities, as they want, there will be riots in the streets,” he said. Repeating his government’s appeals for a “staggered programme” of economic “reforms” and insisting that the government is committed to the IMF, Iqbal said, “The economy and society cannot absorb the shock or cost of a front-loaded programme.”

The government has also lifted curbs that it had imposed on imports with the aim of limiting the depletion of foreign currency reserves. Domestic manufacturers had complained the curbs were self-defeating, since they adversely impacted the exports needed to earn foreign exchange.

The News reported unnamed sources had told it that the IMF is demanding 600 billion rupees in new taxes to partially recover a 2 trillion rupee “breach” in budgetary estimates. For its part, Dawn reported that energy subsidies are on the chopping block. Both the IMF and the government are hiding their discussions and agreements from the public.

The government is desperate for an agreement with the IMF, since all avenues of external financing have dried up, including from virtually all of its traditional allies among the Gulf monarchies. Islamabad needs $8 billion by June for debt repayments alone. Debt obligations by 2025 stand at a whopping $73 billion.

The interim government is also in a deep political crisis. Sharif’s Muslim League (PML-N) and its chief coalition partner, the Pakistan People’s Party (PPP)—both of which have long records of enforcing IMF austerity—orchestrated the ouster of Imran Khan’s Tehreek-e-Insaf (PTI) government in April 2022 with the support of the army top brass and the judges of the country’s highest court. During his three and a half years in office, Khan carried out two rounds of some of the most brutal austerity and “reform” measures in the country’s history to secure and continue a $6 billion bailout agreement with the IMF. He was ousted after reintroducing energy subsidies in February 2022, in violation of an IMF agreement, in the hopes of mollifying mass discontent over price hikes.

Another factor in Khan’s ouster was concern among a significant section of the Islamabad elite that he was shifting Pakistan’s foreign policy too far away from its traditional alliance with Washington, and towards closer ties with Russia and China. China has been blamed for the debt crisis as Pakistan owes $30 billion to Beijing. Islamabad was ordered by the IMF to renegotiate power purchasing agreements with Chinese plants worth $1.1 billion. Reportedly, the IMF has taken exception to Islamabad’s failure to reschedule this debt. In contrast, Islamabad owes $41 billion to international banks, including the IMF.

Since his ouster, Khan has been able to win support among professionals and middle-class layers on the basis of anti-US rhetoric. He has blamed Washington for his ouster, and exploited the interim coalition government’s implementation of hated IMF austerity. The IMF released a long-delayed tranche of its loan package last August after the new government had implemented a series of devastating cuts.

The social catastrophe in Pakistan is most starkly revealed among 33 million people affected by last summer’s floods. A third of the country was inundated as an extreme heat wave provoked by climate change triggered glacial melting in the Himalayas that sent vast quantities of water plunging onto lower-lying terrain. Ten million children remain in dire need of “immediate, lifesaving support,” according to the UN. It has also warned that 4 million children are still living near contaminated and stagnant flood waters, “risking their survival and wellbeing.” “Nearly 15 million people in flood-affected areas need emergency food assistance, while an estimated 9 million people are being pushed into monetary poverty,” the UN reported in January.

Less than half of the utterly inadequate $816 million pledged to the UN’s emergency Pakistan relief fund has materialised. The UN fears there won’t be any money left beyond January to assist those in desperate need.

Last month, Prime Minister Sharif and UN Secretary-General António Guterres co-sponsored an International Conference on Climate Resilient Pakistan that was supposed to raise money to both support immediate flood rehabilitation projects and investments in infrastructure to protect Pakistan from the long-term impacts of climate change. While $9 billion was purportedly raised, the money is expected to be made conditional on the fulfillment of the IMF agreement. “There is no free money. And everybody who pledged their contributions today will come with certain expectations,” Achim Steiner, the head of the UN Development Program, said after the conference concluded.

In line with the global onslaught of finance capital, the IMF has refused to relax any of its stringent conditions even in the face of the devastation caused by the floods. Last year’s flooding is estimated to have caused over $30 billion in damage and wiped out 80 percent of the country’s crops. Exacerbating the plight of the masses, the government restricted its aid spending in order to remain compliant with the IMF.

The grossly underestimated official inflation rate was 24.5 percent in December. Prices of foodstuffs in urban areas were up by a 32.7 percent annual rate and by 37.9 percent in rural areas. Economist and former finance minister Hafiz Pasha estimated that annualised inflation will hit 70 percent in case of a default and 35 percent if an agreement with the IMF is reached.

Conditions of daily life are already horrendous. One person died and several others were injured, in Mirpurkhas in Sindh province, on January 8, in a stampede of several hundred people desperately trying to access a few truck loads of subsidized goods that had arrived in the town. They were attempting to buy a kilogram of wheat for 65 rupees, when the retail price is between 140 and 160 rupees. Large shipments are stuck at ports due to a lack of dollars to settle bills, which is contributing to price hikes.

Exacerbated by the supply chain disruption due to the global pandemic, the war in Ukraine, and unrestrained price gouging by large corporations, skyrocketing prices have worsened widespread food insecurity and hunger in Pakistan. The vast majority of workers and rural toilers cannot make enough to even pay for food. A daily wage worker earns between 15,000 ($56) and 20,000 ($75) rupees a month and in most cases must feed an extended family. In most areas of the country, a graduated teacher of a government school might make 22,000 ($82) to 30,000 rupees ($112) a month.

Aiming to cash in on the growing popular hostility to the government, Khan and the PTI are intensifying their demands for an early general election. In January, the PTI withdrew from provincial governments in Punjab and Khyber Pakhtunkhwa, forcing snap elections for both provinces, which must be held within 90 days. Punjab was the traditional power base of the PML-N, but the big-business party synonymous with IMF austerity has lost in all by-elections held since assuming national office in April.

The 12-hour power outage that affected the entire country on January 23, the second grid breakdown in three months, further discredited the government. The outage was attributable to aging and outdated infrastructure.  

Regardless of which of the three main parties have held power, they have all propped up and bowed to the most powerful institution in the country, the US-backed Pakistan army. Pakistan’s ruling elite has a long history of resorting to brutal military dictatorships whenever it feels its grip on power challenged by opposition from below.

Without the IMF’s blessing, Pakistan can hardly raise a dime. And without Washington’s approval, the IMF will not talk to Islamabad. In comments to the Dawn last month, an unnamed US government official insisted that Islamabad must implement the pro-global investor reforms demanded by the IMF. “To put Pakistan on a sustainable growth path and restore investor confidence, we encourage Pakistan to continue working with the [IMF] on implementing reforms, especially those which will improve Pakistan’s business environment,” the official told the newspaper.

NATO sends over 120 battle tanks to Ukraine in “first wave”

Andre Damon

Twelve NATO countries have pledged to send between 120 and 140 modern main battle tanks to Ukraine, in what Ukrainian Defense Minister Dmytro Kuleba said was the “first wave” of tank deliveries, with more to come.

“The tank coalition now has 12 members,” Kuleba said Tuesday in an online briefing. “I can note that in the first wave of contributions, the Ukrainian armed forces will receive between 120 and 140 Western-model tanks.”

The announcements make Ukraine, at least on paper, one of the most powerful militaries in the world, on par with the tank capability of some of the major NATO powers. The UK maintains 158 Challenger 2 main battle tanks on active duty, while France operates 222 Leclerc main battle tanks.

Last year, Ukrainian officials called on NATO members to provide it with 300 main battle tanks. At the time, this was seen as an enormous number even among defenders of the war. But with weapons surging into the country, it is likely to be the lower bound.

The figure of 140 tanks does not take into account the hundreds of tracked armored personnel carriers already in or heading to the country.

Last week, the Pentagon announced that 60 Bradley fighting vehicles had shipped from South Carolina, and that the vehicles are arriving in Europe this week.

But even the massive quantities of weapons streaming into Ukraine are only a down payment.

Reuters reported that the White House will announce a further $2 billion worth of weapons shipments to Ukraine, including a long-range missile capable of striking over 100 miles.

The weapons system, known as the ground-launched Small Diameter Bomb, is a rocket-launched maneuverable glide bomb with double the range of the HIMARS missiles Washington has already provided.

The deployment would mark a repudiation of Biden’s pledge in May that “We are not encouraging or enabling Ukraine to strike beyond its borders,” and his declaration that “We’re not going to send to Ukraine rocket systems that strike into Russia.”

In an interview with NPR on Tuesday, Ukrainian Defense Minister Oleksii Reznikov called for the US to send fighter jets to Ukraine.

“I’m sure that’s absolutely realistic,” he said. Reznikov discounted reported concerns among the NATO members over the escalatory character of such an action, declaring, “What is impossible today is absolutely possible tomorrow.”

Poland, Latvia and Lithuania have already publicly stated their agreement with this demand.

“Ukraine needs fighter jets ... missiles, tanks. We need to act,” Estonian Foreign Minister Urmas Reinsalu said Tuesday at a joint press conference in Riga with Latvian and Polish officials.

“Because fighter jets and long-range missiles are essential military aid, and at this crucial stage in the war, where the turning point is about to happen, it is vital that we act without delay,” Lithuanian President Gitanas Nausėda said in an interview with Lithuanian National Television.

He concluded, “Those red lines must be crossed.”

Asked about sending fighter aircraft to Ukraine at a news conference on Monday, French President Emmanuel Macron declared, “Nothing is excluded.”

On Tuesday, the US accused Russia of being out of compliance with the New START treaty, the last remaining nuclear arms control treaty between the US and Russia.

The treaty limits the total number of warheads that the US and Russia may deploy. The complaint sets into motion a series of steps that could lead to the breakdown of the treaty, further inflaming nuclear tensions escalated by the war.

In 2019, the Trump administration withdrew from the Intermediate-range Nuclear Forces Treaty, allowing the US to ring Russia and China with short-range nuclear weapons.

In the month since Ukrainian President Volodymyr Zelensky addressed a joint session of Congress, US-NATO involvement in the war has escalated enormously, first with the dispatch of the Patriot missile system, followed by the Bradley and Stryker fighting vehicles, and finally the Leopard and Abrams main battle tanks.

NATO war planners are seeking to continue this, with imminent plans to send Ukraine long-range missiles and active discussions about the dispatch of fighter jets to Ukraine.

Each of these new weapons systems—bringing with them enormous logistical, maintenance and training requirements—will even further entangle the US and NATO in the war and create the conditions for demands for further escalation, including the creation of no-fly zones and the direct deployment of US and NATO troops.

How the COVID-19 pandemic has wreaked havoc on American theaters

David Walsh

The latest edition of Theatre Facts, the annual survey of the state of the not-for-profit theater world in the US, came out in late 2022. The report is prepared each year by the Theatre Communications Group (TCG), an organization that promotes professional non-profit theater.

The most recent survey covers the state of the field in 2020-2021. That is to say, it provides a glimpse of the conditions produced by the COVID-19 pandemic, both short- and long-term.

Not surprisingly, theaters in the US (and elsewhere) were devastated. They remain threatened.

Theatre Facts explains that starting in March 2020, “theatres across the country closed their doors as the virus spread. The total loss to the performing arts industry attributable to the pandemic is over $3.2 billion, and changing COVID-related behavioral patterns have decreased audience ticket demand by 20-25 percent.”

The report focuses on 136 theaters that completed a TCG survey each year from 2017 to 2021—out of a nationwide total of 1,852 non-profit theaters, whose productions played before some 2.9 million audience members in 2021.

The total income of these 136 “trend theaters” peaked in 2019, then fell by 49 percent between 2020 and 2021. That amounts to a $900,000 loss in earned income per theater. Over the five-year period, earned income contracted by 61 percent.

Average subscription income to the 136 theaters fell by 82 percent over the same period. Average single ticket income also plummeted by 82 percent from 2020 to 2021, and fell 93 percent between 2017 and 2021. 

Startlingly, the “net effect,” the report indicates, was a “a 90% reduction in total ticket income over the trend period, punctuated by a drop of 88% from 2020 to 2021. Total ticket income covered a high of 42% of expenses in 2019, in contrast to the low of 7.3% in 2021.”

“It was a crash,” as one media account commented bluntly.

Meanwhile, corporate funding fell by 28 percent from 2017 to 2021, and by 21 percent in 2021 over 2020 alone. Various other forms of private giving also fell. “Considering both earned and contributed income combined, total income fell over the 5-year period by 25%,” according to Theatre Facts.

If those operating not-for-profit theaters in the US did not lock up their venues and walk away it was principally because government funding increased sharply, reflecting political concerns about the consequences of the arts sector simply collapsing.

For the same group of 136 theaters, average federal government funding, for example, “ended the period more than 14 times greater than the 2017 level.” State support was more than 200 percent higher in 2021 than in 2017, while average local government funding ended 43 percent higher at the end of the same period.

These not-for-profit US theaters survived because of government subsidies. Of course, serious theater by its very nature requires state support. It is not a profit-making venture. The current artistically degenerated state of for-profit Broadway (where the average paid admission to a musical was $132 during the 2021-2022 season) and even Off-Broadway is convincing evidence of that.

Government funding was so relatively generous during the pandemic that many of the theaters, because of vastly reduced expenses, actually experienced operating surpluses. The various theaters’ working capital hit a peak in 2021.

This came in large measure at the expense of their workforce. At the “trend theatres,” average total staff fell 66 percent from 2017 to 2021, and total compensation declined by 33 percent. “There was slight growth in management and general personnel expenses over the trend period,” the survey points out, “but total personnel expenses in all categories fell from 2020 into 2021 with program personnel expenses cut by 44%.”

In any event, the “frothy blip of budget surpluses” will be short-lived. Special government programs and funding have disappeared, but audiences have not yet returned in force.

According to an October 2022 article at Marketplace.org, regional theaters, for example, “have particularly struggled to recover from those losses and get customers back in seats. Average ticket sales for performing arts organizations are at 75% of what they were pre-pandemic, and may reach 80% by year’s end.” The reality of “how audiences have and have not returned and where organizations are feeling that strain is different place to place, but across the board, almost nowhere is [it] back to 2019 numbers.”

Barter Theater in Abingdon, Virginia [Photo by RebelAt / CC BY 2.0]

Expenses, partly due to the general inflationary trends, have risen. “Sheets of plywood, sticks of steel, bolts of fabric, and then even the cost of paper to send the postcard out about the production costs more than it used to,” the managing director of one theater explained to Marketplace.org

Moreover, the pandemic brought with it “new health and safety protocols. Routine testing is the norm now in many theater companies, which isn’t cheap. Some organizations purchased HEPA air filters for theaters and rehearsal spaces, as well as see-through masks used in the earlier part of the pandemic during performances.” In addition, hiring understudies, previously impossible for smaller companies “is now in many cases necessary. As is the hiring of a COVID safety officer to oversee ever-changing pandemic protocols.”

A survey of Washington D.C. theatergoers discovered what should come as no shock to anyone, “Theatre attendance is down overall, and it is driven by continued concerns about COVID-19.” Theatre Washington found that while “58 percent of respondents previously attended the theatre six or more times, only 31 percent did so after reopening. Almost half (46 percent) of respondents have attended the theatre just three times or less since reopening.”

Again, unsurprisingly, the survey found that the central reason “why some patrons had not returned to theatres since reopening was their concern over becoming ill from COVID exposure. A full 68 percent of patrons stated that they consider the possibility of contracting COVID-19 to be a very important reason for not attending theatres.”

Concluding the survey, Theatre Facts 2021 observes that only “sharp reductions in expenses coupled with large growth in government contributions and investments kept theatres afloat” in 2020-2021. However, as audiences return to live performances, “theatres will be challenged to revive earned revenue income sources to counter reduced government relief and the effects of high inflation.”

Strikingly, over the four-year period 2017-2021, the number of theater performances in the US dropped more than 70 percent and attendance fell by over 80 percent, “with more pronounced drops for audiences age 18 and under.”

The study finally asks: “Will audiences, ticket sales, and subscriptions return to pre-pandemic levels? Will new sources of government support emerge to replace programs such as the Paycheck Protection Program and the Shuttered Venue Operators Grant program? Will rising inflation hamper fiscal sustainability, and what impact might that have on pay equity in the sector?” The bureaucratic language notwithstanding, these are existential questions for serious theater production in the US.

Millions of workers in France march against pension cuts, Macron and war

Anthony Torres & Pierre Mabut

Tuesday saw a second nationwide protest in France against President Emmanuel Macron’s plan to slash pensions by raising the minimum retirement age to 64 and increasing the pay-in period to 43 years. Rail and transit workers, energy and refinery workers and public servants went on strike against the cuts. Protesters also denounced the Macron government’s broader policies, including France’s expanding role in the US/NATO war against Russia in Ukraine.

A line of riot police officers divides protestors at the end of the demonstration against plans to push back France's retirement age, at the Invalides monument, Tuesday, Jan. 31, 2023 in Paris. [AP Photo/Thibault Camus]

The protests were broader than those held on January 19, when 2 million people marched. According to the trade unions that called the nationwide action, 205,000 people marched in Marseille, 80,000 in Toulouse, 28,000 in Nantes, 25,000 in Nice and 18,000 in Toulon. In Rennes, where 23,000 people marched, police assaulted protesters with water cannon. The General Confederation of Labor (CGT) announced that 500,000 people marched in Paris, 100,000 more than on January 19.

Prime Minister Elisabeth Borne, who before the protest announced that her raising of the retirement age was “non-negotiable,” mobilized 11,000 cops across France, including 4,000 in Paris.

This nationwide strike is part of a broader, international upsurge of strikes across Europe. Yesterday, as Turkish refinery workers mounted a work-to-rule action and Spanish air traffic controllers went on strike, 12,000 workers marched in protests in Brussels. Belgian rail and transit workers, teachers and health care workers were protesting against declining real wages and inflation, and demanding better working conditions.

On February 1, strikes are expected in Britain and Finland. The Finnish unions have proposed 5 percent raises in several industries, although inflation is far higher, at over 10 percent, and strikes are set to begin today and continue throughout the month.

In Britain, a half-million strikers are expected as school teachers, rail workers, public servants, university lecturers, bus drivers and security guards all go on strike. The British prime minister’s office at 10 Downing Street has publicly announced that Wednesday will be “very difficult.”

Across Europe and beyond, the working class is mobilizing as an international force against not national, but global problems: inflation, social austerity, health crises and war. The growth of opposition to war and military spending in France, after Macron announced a staggering €400 billion military budget, was particularly evident on Tuesday.

These strikes raise crucial issues of political perspective: How can workers overcome the obstacles posed by pro-government national union bureaucracies, unify the working class across national borders, and oppose the policies that emerge from union negotiations with Macron? It is crucial to unify the working class against NATO’s reckless escalation of its war on Russia in Ukraine, which the French CGT union bureaucracy has officially endorsed.

Protesters in Amiens hold signs saying "They can always find money for war, never for peace." [Photo: WSWS]

Valérie, who works at a school for handicapped children, told the WSWS in Paris that she feared the sending of tanks to Ukraine by Macron and other NATO powers would provoke a global conflict. “It’s true that the risk is real,” she said. “I’m afraid of all of that. But here we are, I get up in the morning and I tell myself I’m struggling for me, I’m struggling for my son and for my children, we are always struggling.”

The WSWS spoke to Maxime, who works at a bookstore and said he came to protest “Macron’s pension cuts and to fight against possibly having to work two years more for pensions that will in any case be very small.” He added, “And also, working at a bookstore is not a very high-paying job. When you are a bookstore employee, you get by without having very much. The only thing that we really know so far is that we’re being told no retirement before 64. In fact, most of us know it would be more like 67, 68 or even 70.”

Maxime denounced the vast sums Macron is spending on war and the police, and the soaring personal fortune of Bernard Arnault (€213 billion), the world’s richest man. “There is so much money for the army, for the police and for the security forces,” he said. “But on the other hand, when you start talking about raising workers’ wages, helping people, there is nothing—even though now, the world’s richest man is French. During Macron’s two terms, there have been enormous, constantly-renewed handouts to the corporations, while workers are supposed to foot the bill.”

Maxime said he hoped the protest would provoke a social explosion. “I think the movement against pension cuts is bringing together many frustrations about everything that has happened since Macron was elected,” he said, “and even before that, in fact. We are hoping it will turn out to be a catalyst for other movements, too, like the ‘yellow vests’ were in their time, which led to other protests, like against the security law and all of that.”

The WSWS also met high school students who were protesting against the rise in the retirement age. One of them said, “They want to make pensions come very late for everyone, even though some jobs are much tougher or more complicated than others. And so it’s obvious that some will die before getting to retire, and we do not want to die before retirement. We want to enjoy life and retire early enough that we can continue on with the rest of our lives.”

Jihan, a high school student, stressed the importance of uniting students with the working class: “I think it’s very good that high school students feel involved. It is better to wake up and fight this injustice. Just after graduating from high school, we will go to work or have to get a job to finance our studies, so students are very close to the workers.”

WSWS reporters also covered the protest in the city of Amiens in northern France, which was again larger than on January 19, with 18,000 protesters and many youth. They spoke to Augustine, a high school student, who said: “We protested in front of our school to get people to come to Amiens. We are there to support our elders. Macron’s army budget is a political choice made to support wars in the interest of the system.”

Students protest pension cuts in Amiens with a coffin saying, RIP Pensions, 1982-2023. [Photo: WSWS]

Rémi, a history student at Jules Verne University, denounced “conditions facing workers in this period of inflation,” and continued, saying, “The situation keeps getting worse and worse. We must stop useless spending like the military budget. During the pandemic they have relentlessly enriched the bosses. Now, people have trouble getting enough to eat.”

Three political science students at the same university said Macron’s cuts were “illegitimate,” with Louise commenting: “Macron makes the lives of youth precarious. We want to enjoy our youth without having to worry about what will happen to us in 50 years. But we have no future under this system. The military budgets are really frightening. This is not the time for such measures, when we are struggling for our lives.”

UK Conservative Party chair Zahawi forced to resign

Robert Stevens

The continuing crisis of Britain’s ruling Conservatives saw the sacking of party chairman Nadhim Zahawi on Sunday. Zahawi was fired after Prime Minister Rishi Sunak’s “ethics adviser” found he committed multiple “serious breaches” of the ministerial code by failing to be transparent about his tax affairs.

This followed 10 days of intensifying claims from tax experts, opposition MPs and newspaper exposures that the multi-millionaire tried to avoid paying tax.

Newly Appointed Prime Minister Rishi Sunak holds his first Cabinet Meeting the morning after assuming office. Nadhim Zahawi is on the right of the table (third nearest camera). October 26, 2022, London, UK [Photo by Simon Walker/No 10 Downing Street / CC BY-NC-ND 2.0]

Zahawi was appointed party chair by Sunak in November. Sunak only took office himself in October, as the third prime minister in six weeks, following the forced resignations of Boris Johnson and Liz Truss. Zahawi remains Tory MP for Stratford-Upon-Avon.

Zahawi was promoted to education secretary in October 2021 by Boris Johnson and again promoted—as the last chancellor in his administration—from July 2022 to September last year. Zahawi was then replaced as chancellor by Kwasi Kwarteng when Truss replaced Johnson.

Zahawi and his wife are among numerous senior government figures who have amassed vast wealth. They made a fortune from various companies and have built a £100 million property portfolio. More than half the property was bought while Zahawi served as a government minister. Among their assets are five personally owned residential properties—worth at least £17 million. Three are in London, one in Warwickshire and one in Dubai.

The Guardian revealed on January 20 that Zahawi “agreed to pay a penalty to HMRC [HM Revenue and Customs] as part of a seven-figure settlement over his tax affairs…” The newspaper was “told that the former chancellor paid a penalty imposed by HMRC—part of an estimated £5m tax bill.” The newspaper noted, “Penalties are applied if someone does not pay the correct tax at the right time.”

HMRC’s investigation centred on a 42.5 percent stake in YouGov held by Zahawi’s father through an offshore vehicle in Gibraltar, Balshore Investments. YouGov, an Internet-based market research, opinion polling and data analytics firm, was co-founded in 2000 by Nadhim Zahawi. The Balshore shares were eventually sold for an estimated £27 million in 2018. The disposal of the profits and tax receipts was the basis of the HMRC tax investigation.

According to the newspaper, “A source familiar with the payment” said a penalty was triggered as a result of a non-payment of capital gains tax due after the sale of shares in YouGov. Zahawi could have been subject to larger penalties had he not reached a settlement towards the end of last year.

Experts estimate the tax due was about £3.7 million in capital gains tax from the sale of more than £20 million in YouGov shares. Zahawi attributes this to an error that was “careless and not deliberate.”

Sunak refused to fire Zahawi at that stage, instead requesting an ethics adviser, Sir Laurie Magnus, to investigate his tax affairs.

Pressure intensified last Thursday when HMRC’s chief executive, Jim Harra, told MPs on the cross-party public accounts committee that under law, “There are no penalties for innocent errors in your tax affairs”. He added, “If you take reasonable care, but nevertheless make a mistake, whilst you will be liable for the tax, and for interest … you would not be liable for a penalty.”

Magnus found that when Zahawi was appointed chancellor on July 5 last year, he filled in the relevant form with no reference to the HMRC investigation. Zahawi started his “interaction” with HMRC in April 2021, settling the dispute in August last year with an agreement signed in September.

Under the ministerial code, ministers must update a declaration of interest form, including details of any tax problems. Ministers are required to make senior civil servants aware of any potential issues that could arise. There is no evidence that Zahawi did this when acting as chancellor of the exchequer.

Magnus found that Zahawi breached the ministerial code from the outset by treating the HMRC investigation into him as a non-issue, with a face-to-face meeting in June 2021. Zahawi claimed that he did not realise this was a formal probe into his tax affairs.

Zahawi’s dubious financial dealings were no surprise to anyone in Whitehall. The Observer revealed on Sunday that Sunak “was told there could be a reputational risk to the government from Nadhim Zahawi’s tax affairs when he appointed him as Conservative party chair in October.”

But for Sunak, such warnings were small fry, as he and his wife possess a fortune of at least £730 million. Last year Sunak entered the Sunday Times Rich List, with the WSWS noting that he was “the living embodiment of government in the service of the financial oligarchy … of rule of, by and for the oligarchy.”

Government and business are increasingly the same thing, with the financial aristocracy running both.

Another of Johnson’s chancellors, Sajid Javid, was a multi-millionaire on entering parliament in 2010 with a fortune made in banking, as well as a property millionaire—who owned three homes—two properties in London and one in his constituency of Bromsgrove. Sky News reported this month that he is “in talks about a role with an investment firm with close links to SoftBank, the giant Japanese conglomerate.” The conglomerate, Centricus, is a “London-based group which manages more than $40bn in assets.” Prior this Javid, who previously held the position of health secretary, had share options in a California tech firm behind health sector software. These were only sold after MPs pointed out the clear conflict of interest.

Despite a parliamentary majority of over 70, stemming from Johnson’s defeat of Labour in the 2019 general election, the Tory government is increasingly unstable. Sunak was handed power by the financial markets’ removal of Truss, who committed the crime of outlining massive tax breaks for the rich without premising them on intensified austerity against the working class.

Zahawi is the second minister to be forced to resign in a government barely 100 days in office. Gavin Williamson stepped down as Cabinet Office minister less than a fortnight into Sunak’s new government. Sunak’s deputy prime minister, Dominic Raab, is being investigated over claims of bullying.

Sunak was only able to take office in the first place and his rotten government continue in the saddle due to its being propped up by the Labour Party and trade union bureaucracy.

Johnson and Truss were kept in place by Labour leaders Jeremy Corbyn and Sir Keir Starmer on the basis of a de facto coalition in the “national interest”. This allowed the bourgeoisie time to reorganise its affairs and remove Truss on the basis that Sunak’s new chancellor, Jeremy Hunt, be tasked with massively ramping up the offensive against the working class.

Labour is incapable of mounting any popular challenge to Sunak. Following Zahawi’s fall, Labour’s Shadow International Trade Secretary Nick Thomas-Symonds declared “There are now very serious questions for this Prime Minister who promised integrity, promised accountability, but that isn’t what he is delivering. Instead, he has been weak, he has vacillated and has once again put party before country.” Everything is being funneled through the parliamentary set-up, with Thomas-Symonds stating, “The Prime Minister should now be coming out and giving us an explanation of these matters.”

The Zahawi affair only confirms that there is no fundamental political opposition to the Tories within the parliamentary set-up, with the two main parties in agreement with intensifying NATO’s war against Russia and deepening the offensive against the working class.

Concern and anger in China over ending of zero-COVID policy

Lily Zhou

The Chinese government’s abrupt ending of the zero-COVID policy that was successful in containing the pandemic has been met with a mixture of shock, concern, anger and opposition as the virus has rapidly spread through the population of 1.3 billion people. While the official death toll since the beginning of December stands at 60,000, modelling by Airfinity conservatively estimates the figure at 700,000.

Qianmen pedestrian shopping street on the first day of the Lunar New Year holiday in Beijing, Sunday, Jan. 22, 2023. [AP Photo/Andy Wong]

Under relentless pressure from the major imperialist powers to “open up,” the Chinese Communist Party (CCP) regime seized on small middle-class protests last month demanding “freedom” and an end to zero-COVID to dramatically accelerate the lifting of all restrictions. In adopting the murderous herd immunity policy of governments around the world, the CCP has promoted the same lies that the latest variants are “mild,” no worse than the flu and “living with the virus” is necessary to revive the economy.

With the traditional media heavily controlled by the state, the only avenue for the expression of opposition to this sudden about-face is social media, which is itself heavily monitored and censored. Most social media platforms such as Weibo and Zhihu are predominantly used by sections of the middle class, including students, as well as young and middle-aged people. Nevertheless, social media does provide a glimpse into the sentiments of working people that find no expression in the official press or for that matter the Western media which, with staggering hypocrisy, now accuse China of the practices prevalent elsewhere in the world such as falsifying or minimising health statistics.

Soon after the complete lifting of zero-COVID measures in mid-December and the rapid surge in infections across in the country, social media platforms were completely dominated by discussion of the pandemic. Many were sharing their symptoms after testing positive, talking about how most people they knew were infected and complaining about the difficulty of seeing a doctor or even getting an antigen test. Those who had not been infected were preoccupied with discussing preventative measures. A week or two later, as the death toll rose, obituaries of celebrities, intellectuals and veterans started to emerge, as well as posts from ordinary working people about the deaths of loved ones.

While the social media discussion of COVID has ebbed, it has become more critical. The themes have included: the stark contrast between everyday experiences and the state propaganda; why was the lifting of zero-COVID so rushed; the efficacy of vaccines and the potential for re-infection; and reports of long-COVID symptoms already experienced by many.

The three posts below and a selection of the responses give an indication of the discussions underway. All three are still posted.

1. The first post on January 16 on Weibo from Zhejiang Province stated “Wanna know how my grandfather passed away?” It described in detail how he was initially all right after being infected but his symptoms worsened very rapidly after leaving hospital. He died very quickly, just 15 days after being infected. The post received 9,000 likes, 1,000 comments and was reposted 1,700 times. Among the responses were:

• One could really say that your grandfather was murdered by those health care experts who promoted that [Omicron] is a mere cold, that [infections] are all asymptomatic and that zero-COVID should be lifted.
• I’m sorry for your loss. Are you in Wenzhou [a city in Zhejiang]? A lot of elderly people passed away. I don’t understand how it came to become this terrible.
• I was at the hospital a couple days ago but could not get access to a bed. I had to stay in the Emergency Room. It was filled with elderly people, and basically every day we had someone passed away…. My whole perspective about life was challenged during that couple of days.
• A small group of evil people and whiners instigated [opposition] among gullible young people, which in turn accelerated in the making of this catastrophic tragedy….
• My grandfather had a fever and passed out on Dec 27, was hospitalized on Dec 28, was able to get out of hospital twice, was conscious the whole time, but passed away on Jan 10. I cannot find a reason to celebrate this New Year?
• My grandfather passed away very abruptly as well. The day before [his death], he told me not to worry and was not willing to go to the hospital. He left the next morning, but the hospital would not even write down COVID [as the cause] on his death certificate. What a world! At the same time, daily COVID infections were reported [officially] to be a dozen cases across the country.
• Most people in my office [at work] are young and strong and are under 40. However, 90 percent of them still have lingering symptoms even after a whole month. Older people should be even more cautious.” 

2. A song titled “Everything will be fine very soon” was composed and published in mid December. It was then posted again on the state-owned Xinhua news agency’s official account on Chinese TikTok on December 16. The song was released as mass infections spiraled around China and was performed at CCTV’s New Year Gala, a program broadcast to the entire country and watched by hundreds of millions of people on the eve of Chinese New Year. The song’s lyrics are:

No discomfort, dear?
Everything will be fine soon.
At the end of a special year
There are always worries.
You don’t have to be afraid.
Because I’m always here.
Be brave! Hit the road with an open heart!
We’ll go to movies together
We’ll go to pubs together
We’ll run away together
We’ll meet friends and drink together
We will talk about our worries
We will sunbathe together
We will hang out together
Together in the sunset
Masks will no longer separate
Each other's beautiful faces

The song provoked angry reactions. Some of the most widely liked comments in a thread on Zhihu about the song were:

• The lyric is so disgusting. Is it a comfort? No, it’s empty wishful thinking. And also on the line about masks, do you have to be this anti-intellectual?
• It would fit this song even better if it includes a line about “injecting bleach into your veins.”
• If you have a deceased family member, how would you feel about this lyric? This song is even more sinister than Liu Huan’s song that told laid-off workers [in the 90s] to “Start all over again.”

This song referenced in the last response, “Start all over again,” was published in 1997 with state backing after mass layoffs and shutdowns of state-owned factories resulted in the destruction of tens of millions of jobs. Many workers were never able to “start all over again.”

3. A lengthy post on Zhihu on January 15 entitled “Our lovely son left us forever” received 1,204 comments. It stated in part:

“My son was just two years and one month old. He was usually very healthy and only had four fevers after he was born. We never had thought that he would have left us due to COVID. Propaganda from official media said that children infected with Omicron would have more moderate symptoms, so we thought he could just stay home and be given antipyretics. We also knew that our neighbour’s kid was alright taking [Ibuprofen antipyretic liquid] after being infected….

“On the death report, the cause was not COVID. We looked at data from the US, Hong Kong and Taiwan, and saw some really similar cases of death from encephalitis induced by COVID. Most of them were under the age of 13, and a lot more children under the age of 5. None of these were mentioned by the media in China….

“I always felt like I took him to the hospital too late. However, at that time, doctors at the hospital were under very difficult conditions as well. Most of them kept coughing during work. Now, I often wake up in the middle of the night and think of him… I miss him so much but there’s no way I can go back in time.”

The responses included:

• Hugs. I just lost my daughter under similar conditions.
• After lifting zero-COVID, I have been living at a rented place because I have to go to work. My mother, wife and kid have been staying at home all the time. I bring all life essentials to their door after disinfecting everything with ethanol. That’s the only reason why they have not been infected so far. My kid is too young—only two months old—and I’m extremely worried.
• My kid was infected when he was only a little over 20 days old. It did damage to his/her heart, and some of the lab indices are still somewhat elevated 42 days later.
• The same happened to my daughter. I am still very heart broken thinking back on that day [when she passed away]. It’s been a month, but I miss her every single day.
• My mother-in-law is a doctor. More than 90 percent of doctors and nurses are working despite being sick themselves. My mother-in-law started seeing patients the second day after she tested positive, performed a surgery on the third day. She was over 60 but only got one day off….

South Korean intelligence officials raid headquarters of union confederation

Ben McGrath

The South Korean National Intelligence Service (NIS) and National Police Agency raided the headquarters of the Korean Confederation of Trade Unions (KCTU) on January 18 on the basis of allegations that union officials had violated the country’s draconian National Security Act.

The NIS, South Korea’s counterpart to the CIA in the US, has accused four officials of having connections to North Korean agents. Intelligence and police officers also raided the offices of the Korean Health and Medical Workers’ Union (KHMU), a shelter for impoverished workers on Jeju Island, and the homes of the accused officials. All of the raids were supposedly conducted in search of documents related to the charges.

The union officials include a KCTU executive, a KHMU official, a former official at the Kia Motors union, and the owner and director of a shelter and neighboring memorial hall on Jeju Island for the victims of the Sewol ferry sinking in 2014. The last is said to be a former Korean Metal Workers’ Union official at steel manufacturer Posco.

KCTU members protest police raid and arrests. [Photo: KCTU Facebook]

While the police have raided or attempted to raid KCTU offices in the past related to strikes and protests, it is the first time they have carried out a search and seizure for documents under the National Security Act. The 1948 law makes socialism illegal in South Korea. It is also the first time the NIS has been directly and openly involved in a raid on the KCTU.

In a statement on January 18, the KCTU, which postures as a militant labor organization, said, “The government is reviving the police state through accusations of supporting North Korea as well as the ideology that put forward the National Security Act in order to cover up the incompetence and realities of the Yoon Suk-yeol government. The administration is desperately focusing on harming the KCTU and the labor movement, talking about seditious influences that have infiltrated labor unions in conjunction with today’s search and seizure warrant.”

An article in the right-wing JoongAng Ilbo newspaper based on anonymous NIS sources alleged that five North Korean agents had been in contact with the four KCTU officials. It claimed that the chief agent Ri Kwang-jin works for North Korea’s Cultural Exchange Bureau, which is allegedly tasked with generating dissent in South Korea. The NIS claims the four KCTU members met the North Korean agents between 2017 and 2019 in Phnom Penh, Cambodia and Hanoi, Vietnam.

The NIS alleges that slogans used by the KCTU during rallies last August 15 marking the anniversary of the end of Japanese rule, included anti-US and anti-conscription slogans that were generated by the North Korean agents. No evidence has been provided to back any of these accusations.

The NIS has a long history of violent repression since its founding in 1961 as the Korean Central Intelligence Agency (KCIA). Military dictator Park Chung-hee, who came to power that year in a coup, established the KCIA as a tool to crush political resistance to his regime. The KCIA participated in a number of operations including the kidnapping and torture of political dissidents; the infamous 1974 fabrication of the “People’s Revolutionary Party” and execution of eight individuals the following year amidst anti-government protests; and the kidnapping in Japan and near assassination of Democrat and future president Kim Dae-jung in 1973.

While undergoing name changes, the NIS retains this reactionary character, demonstrating that even after South Korea has “democratized” in the 1980s, the police state apparatus established under the military dictatorship remains in place.

In recent years, the NIS ran an online smear campaign in 2012 against then-presidential candidate Democrat Moon Jae-in. The NIS also participated in the forced dissolution of the Unified Progressive Party in 2014. It claimed that members of the party had founded an organization to aid North Korea in the event of war even though the courts admitted that no such organization existed.

The current government of right-wing President Yoon Suk-yeol has revived the old KCIA motto “We work in the dark to serve the light” for the NIS—a sign that a campaign of dirty tricks and repression is going to be stepped up.

The chief target of this reactionary campaign is the opposition in the working class to deteriorating economic conditions, the spread of COVID-19, and the integration of South Korea into US war plans against China. Workers and youth speaking out against the government will face accusations of sympathizing with or being agents of North Korea.

Building on the attacks carried out on the working class by the previous Moon Jae-in government, Yoon came to power in May pledging to repress workers’ resistance to assaults on their working and living conditions.

The KCTU does not defend the interests of the working class. Despite its radical-sounding rhetoric, the KCTU leadership signaled to the government in December that it would wage no genuine fight against the stepped-up assaults on workers, when it helped engineer the defeat of a major strike of truck drivers.

During that strike, President Yoon denounced the drivers as akin to a North Korean threat. Under pressure from the government, the truckers’ union, Cargo Truckers Solidarity, and the KCTU called off the strike with none of the drivers’ demands being met. The unions made no attempt to expand the struggle to other sections of the working class.