US and European powers scramble to acquire critical minerals necessary for EV vehicle production

Gabriel Black

Electric vehicle (EV) sales are surging around the world. In just three years, between 2019 and 2022, global EV sales increased from 2 million to over 10 million units. The International Energy Agency (IEA) estimates that by 2030, EVs will compose 60 percent of all car sales in the combined area of China, Europe and the United States.

This rapid growth in electric cars has important implications for the global economy. While total spending on the renewable energy transition remains substantially below the levels required to halt global warming, a transition of sorts is occurring.

About 7 percent of all greenhouse gases comes from cars. Unlike other sources of emissions, such as flying, shipping or the production of steel and cement, passenger cars can be relatively easily transitioned out of dependency on fossil fuels.

Amid highly volatile and increasingly expensive gas prices, as well as a general concern over the catastrophic effects of climate change, electric cars are being widely adopted.

The growth of EVs has enormous implications: for the capitalist economy, for workers around the world, but above all in the context of the United States’ struggle to maintain its role as the dominant imperialist power.

The United States, China and batteries

As the US economic situation deteriorates, and its relative economic power declines, the planners in the Pentagon increasingly see China as a mortal threat to a US-dominated capitalist system.

The US has now been preparing to wage a war against China for over 10 years. Just this March, a leaked memo showed a top US general predicting the US would be at war with China by 2025.

A major problem, however, exists for the military strategists and policy experts in Washington. China controls a large portion of both the mining and processing of the minerals required to make EV batteries. In other words, they control the supply chains for a new technology that is rapidly becoming central to the global economy.

Share of Chinese control of select critical minerals in refining and mining. This chart uses data from the New York Times and the IEA. Refining refers to the physical refinement of these minerals in China. Mining, however, refers both to their mining in China as well as ownership through Chinese firms in other countries. Data from the New York Times and the International Energy Agency. [Photo: WSWS]

A previous report by the New York Times, basing itself on data from the CRU consulting group, shows that China is responsible for the global production of:

• 54 percent of electric cars
• 66 percent of battery cells
• 77 percent of cathodes (the positive electrode in a battery)
• 92 percent of anodes (the negative electrode)

While China does not directly produce most minerals (except for rare earths and graphite), the country dominates the processing of minerals. China refines:

• 95 percent of the world’s manganese (used primarily as a key alloy in steel)
• 73 percent of cobalt
• 70 percent of graphite
• 67 percent of lithium
• 63 percent of nickel

Meanwhile, by these same estimates, through its companies, China indirectly controls more than half of lithium mining operations and 41 percent of cobalt operations, largely in the Congo.

For decades, the US and its European allies have been content with this situation. While US and European companies owned much of the world’s intellectual property and leading corporate brands, China was made into the sweatshop of the world. Hundreds of millions of Chinese workers have ground their lives away, six days a week, 10 hours a day, in the sprawling factory complexes largely controlled by US and European capital.

Exploiting China’s lower environmental regulations and cheaper labor, Western suppliers have relied on China to perform the toxic task of refining and processing mineral ores into usable material. The fact that most of the minerals would ultimately then be used in production chains located in China further cemented this relationship.

But now, as the Biden administration more imminently prepares for war, the US, Japan and its main imperialist allies in the EU are all scrambling to find alternative sources for these minerals.

The energy transition and minerals

In order to produce the batteries for EVs, a significant quantity of lithium, nickel, cobalt and graphite are required, alongside several rare earth minerals and a host of other so-called “critical minerals.”

The IEA predicts that under a modest renewable energy development scenario, global demand for lithium alone will multiply by 42 times between 2020 and 2040. For cobalt, the demand will grow 21 times, and for nickel 19 times. In short, an unprecedented surge of mining and processing of these minerals must now rapidly unfold.

This chart shows the International Energy Agency's projections for increasing demand of certain critical minerals in 2040 relative to 2020. This chart presumes the IEA's Sustainable Development Scenario, which is based on pledged but not enacted climate policies. [Photo: WSWS]

Because electricity, without batteries, must be consumed when it is produced, energy storage is central to the renewable transition, beyond just EVs.

When electricity is generated by a solar farm, its height of production will be in the middle of the day. Peak power use, however, happens in the morning and evening when workers are home. To better coordinate renewable energy production with its consumption, massive batteries will be required to hold charge.

These problems, known as “intermittency” problems, complicate all forms of renewable energy production. They necessitate, alongside EVs, a massive expansion in battery and thus critical mineral production.

It is in this context of the explosive growth of mineral demand for various types of batteries, and China’s dominance in their supply chain, that the Biden administration has launched a series of measures to develop a new US- and European-controlled supply chain.

Scrambling for contracts, excluding China

A recent New York Times article reports that “U.S. officials have begun negotiating a series of agreements with other countries to expand America’s access to important minerals like lithium, cobalt, nickel and graphite.”

However, the Times notes, “it remains unclear which of these partnerships will succeed, or if they will be able to generate anything close to the supply of minerals the United States is projected to need.”

Here are just a few of the known national agreements that have been made or are being negotiated:

• Japan and the US signed an initial deal in March 2023 over critical mineral supplies. It pledges shared “standards” for mining and processing as well as reviewing foreign investors.
• During the G7, the US and Australia announced a similar new partnership on shared standards for “sustainable supply chains” of critical minerals.
• The EU and the US are in the midst of negotiating a new comprehensive trade deal, of which EVs and critical minerals are an important part. Biden said the agreement “would further our shared goals of boosting our mineral production and processing and expanding access to sources of critical minerals that are sustainable, trusted, and free of labor abuses.”
• Indonesia, the world’s largest producer of nickel and main alternative to Russian nickel, has also approached the US regarding some kind of critical mineral agreement.

The common thread in all of these initial series of trade agreements are words like “sustainable,” “trusted,” “standards, and “free of labor abuses.”

All of these terms are just euphemisms, however, for excluding China and Chinese-owned suppliers.

If Biden or his European or Japanese counterparts were seriously concerned about “labor abuses,” all they would have to do is look outside their own window. In the US, over a dozen people die every day due to workplace accidents overwhelmingly caused by poor safety standards. Meanwhile, child labor is returning to the US with children as young as 12 working in factories.

By pledging themselves to “trusted” and “sustainable” mineral supply chains, the major imperialist powers are signaling their commitment in creating an alternative supply network not dominated by Chinese companies. Among other things, such a supply chain would guarantee some degree of production of these essential minerals in the event of war between the US and China.

However, in the words of Scott Kennedy, an adviser at the Center for Strategic and International Studies quoted by the Times, “There is no way anybody is going to become successful in electric vehicles without having some type of cooperation with China, either directly or indirectly.”

It is, in this sense, unimaginable how a war between the Untied States and China would not lead to a catastrophic breakdown of the global economy given how central this—and many other—Chinese supply chains are. Such a situation would also lead to a doubling-down of oil and gas dependency (something the United States, unlike China, dominates).

Inter-imperialist conflict and the EU

A central feature of the growing scramble for critical minerals is the resurgence of inter-imperialist rivalries and conflicts.

From left, Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, Japan's Prime Minister Fumio Kishida, US President Joe Biden, German Chancellor Olaf Scholz, British Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen at the G7 Hiroshima Summit in Hiroshima, Friday, May 19, 2023. [AP Photo/Franck Robichon]

At the G7, European Commission President Ursula von der Leyen stressed in a speech that the renewable energy transition should “not come at each other’s expense.”

Two months earlier, in March, the EU released a major act called the European Critical Raw Materials Act, which aims to build a so-called “Critical Minerals Club” to lead €20 billion worth of investment by 2030 into critical minerals. The act is seen as a response to and based off of the US CHIPS act.

Underlying von der Leyen’s comments is a growing concern among the US’s imperialist allies that they will be left behind as the US implements a series of protectionist, wartime, non-market measures to create a new critical mineral supply chain.

For example, a major issue at the G7 is the fact that the new US Inflation Reduction Act excludes European car makers from EV tax benefits. This essentially makes American-made electric vehicles more competitive in the massive American car market.

The EU has strongly petitioned the US to include European-made EVs and critical minerals in these tax credit schemes. Under the Inflation Reduction Act, consumers can get up to $7,500 in credit for buying EVs if both the battery components and final assembly have 50 percent or more of their value originating from North America (the NAFTA trio of Mexico, the US and Canada).

Von der Leyen speaks for an entire layer of European capitalists who, in joining the US-led drive to oppose China, fear that they will suffer from the growing nationalist protectionism of the US.

Russia and the war in Ukraine

Previously, the WSWS explained that the war in Ukraine plays a key role in the effort of the American ruling class to acquiring critical minerals.

The eastern expansion of the US-led NATO alliance has always had as its primary goal subduing or even breaking apart Russia, with a particular eye to controlling its natural resources.

Russia plays a particularly important role in high quality nickel production—the demand for which is expected to multiply 19 times in the coming two decades—as well as the platinum-group metals, especially palladium. Russia is also the world’s largest producer of diamonds, the second largest reserve holder of coal and gold, the third largest of iron, and the fifth in silver. This is not to mention Russia’s massive oil and gas reserves. Russia produced 12 percent of the world’s oil prior to the Ukraine war.

The reports coming out of the G7, showing a flurry of activity to develop a new critical mineral chain, confirm this analysis of the central role of critical minerals in the war in Ukraine.

Noting the growing importance of critical minerals to a host of new technologies, the WSWS wrote:

The deep need of American finance capital to dominate current and future sources of critical minerals, as well as the disproportionate control of China over them, forms an important part of the backdrop to the drive to war against Russia…

The breaking apart of Russia and its domination by American capital would be a strategic stepping stone in the efforts of the American ruling class to impose a “new American century” through the subordination of China and Eurasia more broadly to its aims. Resources play a role in this. Amid the enduring need for oil and natural gas, as well as the rapidly growing need for critical minerals, Russia is seen as a vital landmass with a vast array of riches.

The US-EU-Japanese push to secure new minerals forms part of this larger effort to impose a “new American century.” They see the development of alternative supply chains to China as an urgent necessity.

Further implications

The implications of the EV revolution and the new scramble for critical minerals are not just geopolitical.

Leaving aside the cataclysmic impact that a war between the US and China would have, there are other ways in which this transformation in car and energy production—two of the world’s largest industries—will affect workers, workplaces and capitalist society.

For one, EV production assemblies involve substantially less labor than combustion engine-based cars. The offshoring of most EV production (at major car manufacturers in the US, Japan and the EU) leaves significantly less work to be done. Additionally, with the need to retool and construct a more modern assembly line, car companies use EVs as an opportunity to introduce other far-reaching automation.

The auto companies are planning massive layoffs and an enormous increase in the exploitation of workers as part of the transition to EV production.

A truck drives past brine evaporation ponds at Albemarle Corp.'s Silver Peak lithium facility, Thursday, October 6, 2022, in Silver Peak, Nevada. [AP Photo/John Locher]

Another impact of this shift in global production will be in the labor-intensive mining industry. If the IEA’s estimates of a 4,100 percent increase in lithium production and similar giant leaps for other minerals is to be believed, a vastly expanded mining industry will emerge. Centers of global mineral production, such as the Democratic Republic of Congo (DRC), Chile, Russia, Indonesia, Australia, China and others are poised for explosive booms around their key mineral reserves.

While the US, EU, and Japan claim to be seeking “sustainable” modes of producing such goods, with better labor practices, the profitability of these operations will ultimately rely on slashing wages and cutting back on safety to better compete on the global market.

Whether an autoworker in Detroit assembling a new EV or a critical mineral miner in Chile, China, the DRC or Australia—all will be squeezed and pressed by this new, ferocious drive to dominate renewable energy production.

“60 Minutes” exposé reveals massive Pentagon price-gouging

Jacob Crosse

In a letter issued Friday, Treasury Secretary Janet Yellen advised the White House and lawmakers negotiating sweeping social cuts in connection with raising the debt ceiling that the deadline for averting a default was now June 5 instead of her previous estimate of June 1.

The new Treasury estimate, conveniently announced Friday afternoon before a long Memorial Day weekend, afforded President Joe Biden and House Speaker Kevin McCarthy extra time to lock down the votes in their respective parties needed to enact a bipartisan deal to make the working class pay for the war against Russia in Ukraine and the preparations for war against China.

President Joe Biden speaks at the Pentagon, Wednesday, February 10, 2021, in Washington. [AP Photo/Alex Brandon]

Media reports indicate that Biden and the Democrats have already agreed to Republican demands for a freeze on discretionary spending, with the exception of defense and veterans’ benefits. Biden’s record $1 trillion Pentagon budget, a 3 percent increase over the previous year, will remain intact, while outlays for Medicaid, food stamps, welfare, education, housing, job training, public transit and the environment will be substantially cut.

There will be no increase in taxes on corporations or the rich, and money allotted to hire more Internal Revenue Service agents to crack down on wealthy tax cheats will be slashed.

In the name of “fiscal responsibility,” social programs will be ravaged while the financial oligarchy and the military-industrial complex, bathed in blood, gorge themselves.

A window into the criminality and plundering of American society by the Pentagon and Wall Street was provided by a CBS “60 Minutes” exposé that aired this past Sunday. The program featured Shay Assad, a former director of defense pricing and contracting at the Department of Defense. Before working at the Pentagon under the Bush, Obama and Trump administrations, Assad, a Naval Academy graduate, spent 22 years at Raytheon, one of the largest military contractors in the world.

In the “60 Minutes” interview, Assad said the Pentagon overpays for “almost everything.” He called the price-gouging that takes place “unconscionable.”

As an example, Assad presented two oil switches. One, with cabling, was purchased by NASA for $328. The same switch, without cabling, was purchased by the Pentagon for over $10,000.

In relation to the US-NATO war against Russia in Ukraine, Assad pointed to the exorbitant price being paid for the shoulder-mounted Stinger missile. In 1991, a new missile for the launcher cost $25,000. Today, the same missile, which is supplied only by Raytheon, costs over $400,000.

During his time at the Pentagon, Assad’s team authored reports showing that the Department of Defense had paid a subcontractor, TransDigm Inc., $119 million for parts that previously sold for $28 million. During the Iraq war, TransDigm raised the price of a valve needed for the Apache helicopter by 40 percent, or $737, to $1,830. Assad noted that by 2018, the same valve made by TransDigm was being sold for “almost $12,000.”

He observed that price-gouging within the defense industry increased substantially following an edict issued by the Pentagon in 1993 urging military companies to merge, resulting in the consolidation of 51 companies into five. At the same time, the Pentagon, under the Bill Clinton administration, oversaw a massive reduction in the Civilian Acquisition Workforce, whose job is to negotiate and monitor military contracts. From 1990 to 1999, the workforce within this “watchdog,” which included negotiators, overseers and engineers, was reduced by over 130,000 people, or more than 50 percent.

As in every industry, weapons corporations’ price-gouging is done for the enrichment of a privileged few. A graphic displayed during the program showed that from 2000 to 2009, the five major US weapons makers—Lockheed Martin, Boeing, Raytheon, General Dynamics and Northrop Grumman—spent about 3.7 percent of their revenue on dividends and share buybacks, while 6.2 percent went for research, development and capital expenditures. In the following decade, from 2010-2019, these same companies nearly doubled the portion of revenue spent on rewarding their major investors and inflating their stock, spending an average of 6.4 percent on dividends and buybacks. R&D fell by 0.3 percent.

All five major US weapons makers handsomely reward their executive officers. According to Forbes, in the year 2021 the five weapons companies received over $116 billion in Pentagon contracts while paying their top two dozen executives a total of $287 million.

The CEOs of the five companies commanded a combined salary of over $104 million in 2021. James Taiclet of Lockheed Martin received $18.1 million; David Calhoun of Boeing, $21.1 million; Gregory Hayes of Raytheon, $21.8 million; Phebe Novakovic of General Dynamics, $23.5 million; and Kathy Warden of Northrup Grumman, $19.9 million. The average salary of these CEOs, roughly $21 million, is over 466 times the average salary ($45,000) of a US worker.

The Cost of War Project at Brown University found that, in order to ensure a steady supply of government contracts, weapons makers have spent $2.5 billion on lobbying since the launching of the “War on Terror” in 2001. Over the last five years, weapons companies have employed “on average, over 700 lobbyists per year,” substantially more than one lobbyist for every member of Congress.

Beneficiaries of weapons companies’ stock buybacks and dividends include dozens of members of Congress, who own shares in the same companies to which they award multi-billion-dollar contracts.

According to CapitolTrades.com, in the last three years 19 politicians have traded a combined total of at least $1.22 million worth of Lockheed Martin stock; 18 members of Congress, Democrats and Republicans alike, have bought and sold at least $1.29 million of Raytheon stock; 10 lawmakers have bought and sold at least $379,000 worth of General Dynamics shares; 16 members of Congress have traded $2.22 million in Boeing shares; and 13 lawmakers have bought and sold $635,000 worth of Northrop Grumman stock.

On February 24, 2022, the day Russia invaded Ukraine, Republican Representative John Rutherford of Florida and Democratic Representative Earl Blumenauer of Oregon each purchased between $1,001 and $15,000 worth of Raytheon stock.

Two days before the invasion, Georgia Representative Marjorie Taylor Greene purchased between $1,001 and $15,000 worth of Lockheed Martin shares. Greene also purchased Lockheed Martin shares in similar amounts in December and November of 2021.

Seeking to present the illusion of “accountability” where none exists, on Friday a bipartisan group of senators, including Chuck Grassley (Republican of Iowa), Bernie Sanders (Independent of Vermont), Elizabeth Warren (Democrat of Massachusetts), Mike Braun (Republican of Indiana) and Ron Wyden (Democrat of Oregon), announced that they were leading an investigation into price-gouging at the Pentagon.

The investigation thus far has amounted to sending a letter to Secretary of Defense Lloyd Austin requesting that the Pentagon investigate itself. The senators asked Austin to “provide us an update on the Department’s efforts to implement outstanding Government Accountability Office recommendations... as well as your efforts to investigate the price-gouging uncovered by CBS’s recent reporting.”

Germany launches police-state crackdown on climate protesters

Johannes Stern

Police officers in riot gear send people away from a May Day demonstration in Berlin, Germany, Tuesday, May 1, 2018. (AP Photo/Markus Schreiber)

Germany witnessed scenes on Wednesday that are typically seen only in military dictatorships and fascist regimes. Heavily armed police units took action nationwide against the climate change protest group “Last Generation,” storming the homes of leading members. In addition, the group’s website was blocked and the members’ accounts were frozen.

These actions must be taken as a warning by working people in every country. As the capitalist ruling classes escalate their war plans, they work systematically to abrogate fundamental democratic rights and create the basis for police-state rule.

According to the authorities, raids were carried out on a total of 15 buildings located in seven federal states. The actions recalled the darkest period in German history. Carla Hinrichs, a spokeswoman and co-founder of the Climate Alliance, described the storming of her apartment in a tweet:

It was like a scene from a movie. Suddenly you wake up because your door is thundering. You wake up because “police” are screaming and suddenly a policeman with a bulletproof vest stands in front of your bed and points a gun at you. Then they search everything and take everything that actually belongs to your everyday life. That’s scary.

The World Socialist Web Site and the Socialist Equality Party of Germany strongly condemn the police terror against the climate change activists. It is directed not only against the Last Generation but aimed at the suppression of any social and political opposition. Peaceful protest, civil disobedience, strikes and ultimately any form of opposition are to be intimidated and criminalized.

The raids on Wednesday took place on the basis of Paragraph 129 of Germany’s Criminal Code, which prohibits the “formation of criminal associations.”

This has extremely far-reaching consequences. The Last Generation activists protest peacefully and explicitly reject violence. They draw attention to their concerns, often by means of traffic blockades.

Paragraph 129 goes back to the Reich Criminal Code of the German Empire, dating from 1871. It was for the most part applied historically against leftists and communists, sanctioning massive penalties for members of a “criminal association.”

“A person who establishes an association or participates in an association as a member whose purpose or activity is aimed at the commission of criminal offenses shall be punished by imprisonment for up to five years or by a fine,” it states. “Whoever supports such an association or recruits members or supporters for it” is also subject to be punished with “imprisonment for up to three years or a fine.”

Prison sentences have already been imposed on climate change activists in recent weeks. On March 6, two members of the Last Generation were sentenced by the Heilbronn District Court to imprisonment for two to three months without parole for participating in a road blockade. At the end of April, a climate change activist was sentenced by the District Court of Berlin to four months in prison without parole. This repression is now being massively expanded.

Although a court decision has not yet been handed down, the Munich Prosecutor General’s Office, which initiated the raids, declared the Last Generation to be a “criminal association.” Anyone who visited the website of the climate change protest group on Wednesday received the following message:

The homepage of the “Last Generation” was confiscated by the Bavarian State Criminal Police Office on behalf of the General Prosecutor’s Office of Munich—Bavarian Central Office for Combating Extremism and Terrorism (ZET). The Last Generation represents a criminal association according to § 129 StGB (Criminal Code). Attention: Donations to the Last Generation are therefore punishable support of a criminal association!

This militarist posture is not simply the policy of the right-wing Bavarian Christian Social Union (CSU) government but is supported by all state governments as well as the federal government.

Federal Minister of the Interior Nancy Faeser (Social Democratic Party) told the newspapers of the Essen-based Funke media group that the measures taken against Last Generation showed the “rule of law” was not to be trifled with.

“The police and the judiciary do not tolerate crimes, but act—as it is their duty to do,” she said. Legitimate protest, she continued, ends where crimes are committed and others’ rights are violated, adding, “If this red line is crossed, then the police must act.”

The new Berlin justice Senator Felor Badenberg, who likewise classified Last Generation as a criminal association, even linked the climate change activists to terrorism. “Whether the Last Generation has to go underground or something else is a decision that the Last Generation has to make for itself,” she said in an interview with public broadcaster ARD’s “Tagesthemen” program.

Badenberg’s appearance underscores the far-right agenda the ruling class is pursuing and the reactionary goals it serves. Badenberg was most recently vice president of the Federal Office for the Protection of the Constitution (Verfassungsschutz), Germany’s domestic intelligence agency.

Between 2013 and 2018, she worked closely with Hans-Georg Maassen, the far-right president of the Verfassungsschutz, and was, according to Wikipedia, “responsible for the office’s contacts with the German Bundestag (parliament) and the federal government, as well as for the president’s speeches and lectures.”

Russian fascist with ties to leading German neo-Nazis led Ukrainian-backed incursion of Russia

Clara Weiss

In the days after the Russian military was reported to have put an end to the two-day-long incursion of Russia’s Belgorod region, more and more information has come to light that proves the openly neo-Nazi character of the forces involved.

According to the Kremlin, a substantial military operation, involving the army, the air force and the national guard, killed 70 members of the far-right extremist Russian Volunteer Battalion and the ultra-nationalist Legion for a Free Russia after over 24 hours of fighting.

Hundreds of buildings were reportedly destroyed in Russian villages during the attack, which included drone strikes, US-produced armored vehicles and a cyber-attack. In a clear indication that the attack was coordinated and planned by the Ukrainian army, which operates de facto under the command of NATO, the assault by the saboteur units was prepared by a series of Ukrainian air strikes. It was the largest incursion of Russian territory since the beginning of the NATO-Russia war in Ukraine.

The forces carrying it out were blatant neo-Nazis with vast international connections, above all in Germany. Of particular significance is Denis Kapustin, alias Denis Nikitin, a leader of the Russian Volunteer Corps (RVC). The RVC was formed last August in Ukraine. Its declared aim is the establishment of an “ethnically pure” Russian nation state, without the tens of millions of Russian Muslims and members of other national, religious and ethnic minorities that are citizens of the Russian Federation. The RVC uses symbols of the Vlasov Army which collaborated with the Nazis during World War II in their war of annihilation against the Soviet Union, and various insignia of the international far right.

Neo-Nazis with the Russian Volunteer Corps prepare for the press conference not far from the border in Sumy region, Ukraine, Wednesday, May 24, 2023. [AP Photo/Evgeniy Maloletka]

According to the German magazine Der Spiegel, Kapustin, who is known as “Rex,” is considered “one of the most influential figures” in the European neo-Nazi scene by German authorities. Kapustin moved to Germany as a teenager in 2001 and was banned from entering the country in 2019. However, his ties to the German neo-Nazi scene, which is closely intertwined with the state apparatus, remain extensive.

Since 2008, he has run the far-right apparel brand “White Rex” which has grown to become a major force in the international neo-Nazi scene, and is involved in the organization of many large-scale far-right events in Europe. In Russia, Kapustin was for years involved in the notoriously violent and far-right soccer hooligan scene.

In Germany, Kapustin is known to maintain ties to two leading neo-Nazis, Tommy Frenk and Thorsten Heise. Heise is a leader of the neo-Nazi National Democratic Party (NDP) and also believed to play a central role in Combat 18, an international neo-Nazi terrorist network. Heise also had ties to the German neo-Nazi terrorist network NSU, which murdered at least 10 immigrants. The NSU was largely built up and covered up for by the German state and especially the secret service, the Verfassungsschutz.

Other members of the RVC are also notorious neo-Nazis with ties to the Ukrainian states and NATO. Thus, the Russian Alexei Liovkin (or Levkin) is a member of the Black Metal Group “m8181th,” which supposedly means “Hitler’s Hammer,” and a former member of the neo-Nazi Azov Battalion that has played a major role in Ukrainian politics since the 2014 US-backed coup in Kiev.

The denials issued now by Kiev of direct ties to these neo-Nazi forces lack any credibility. According to the Spiegel, one week before the attack, Kapustin and a leader of the Legion for a Free Russia had their pictures taken in Kiev right next to the headquarters of Ukraine’s military intelligence. In interviews in 2022, Kapustin also bragged about having met half of the leadership of Ukraine’s military and claimed to be enlisted as a regular soldier of the Ukrainian army.

The incursion provides an object lesson in the character of the war waged by NATO against Russia. Contrary to what the New York Times and the White House would have workers believe, this war was neither “unprovoked” nor has it anything to do with the defense of “democracy.” It was provoked and prepared for decades, including by the NATO expansion to Russia’s borders but also the promotion and arming of neo-Nazi forces who have been built up systematically as the principal basis for an “insurgency” and a regime change operation in Moscow. The ultimate war aim is the carve-up of Russia and the entire former Soviet Union along national and ethnic lines, in order to bring the region under the direct control of imperialism.

In Russia, the incursion has provoked significant criticisms of the army leadership. A comment in the Nezavisimaya Gazeta pointed out that a new “barrier wall” that was erected for 10 billion rubles in March to preempt further incursions from Ukraine had failed to prevent the attack. The governor of the Belgorod region, Viacheslav Gladkov, said on Thursday that he too had “a lot of questions” for the army leadership.

Yevgeny Prigozhin, the head of the Wagner mercenary force which was built up by and operates as part of the GRU, Russia’s military intelligence, gave an extensive interview this week, sharply criticizing the army leadership. The Wagner group played the principal role in the seizure of Bakhmut but has now announced it would withdraw from the city and hand it over to the regular army.

In the interview, Prigozhin called for the replacement of both Defense Minister Sergei Shuigu and the chief of the general staff, Valery Gerasimov. He said, “I love my motherland, I serve Putin, Shoigu should be judged and we will fight on.”

Prigozhin said that the military leadership had “f***ed up” repeatedly and cited the incursion of the Belgorod region as an example for yet another failure of the military. He warned that Ukraine would seek to strike even deeper into Russia. He insisted that Russia had to transition completely to a full war economy and mobilize many more men than the 300,000 mobilized last fall based on Putin’s partial mobilization order.

Prigozhin’s most remarkable statements in the interview testified to the counter-revolutionary and reactionary traditions in which not just Prigozhin but the oligarchic Putin regime as a whole places itself. In attacking the army leadership, Prigozhin evoked Joseph Stalin, the long-time head of the Soviet bureaucracy, who spearheaded the nationalist reaction against the October Revolution and was responsible for the murder of tens of thousands of socialist revolutionaries and workers in the Terror of the 1930s, as a positive example for Vladimir Putin. Prigozhin said that, in cases of such failure of the army leadership, “Iosif Vissarionovich [Stalin] would have drawn conclusions—he would have shot 200 people… But so far, no one here has drawn any conclusions.”

Then, he explicitly warned of a repetition of the October Revolution. Ranting against the lifestyle of the children of Shoigu and other ministers, Prigozhin warned that the lavish lifestyle of the elites amidst war “can end just as it did in 1917 with a revolution, when first all the soldiers will rise up, and then their loved ones will. There are already tens of thousands of them—relatives of those killed. And there will probably be hundreds of thousands—we cannot avoid that.”

Prigozhin’s warnings reveal the main fears of the Russian oligarchy: Having emerged out of the Stalinist reaction against the socialist October Revolution, which culminated in the destruction of the Soviet Union and the restoration of capitalism, the Russian oligarchs fear nothing more than that this war, like World War I, will lead to an eruption of revolutionary movements and that workers in Russia and Ukraine will revive their powerful and shared Marxist and internationalist political traditions.

Australia: Telstra targets poor with price hike while slashing jobs and wages

Noel Holt

Telstra, Australia’s largest telecommunications company, announced last month that it will increase the cost of mobile telephone and data service by up to 20 percent from July 4. Even as it slugs customers with a price rise, the formerly state-owned provider is continuing to slash jobs and wages as part of a perpetual restructuring operation.

Telstra store in Chadstone Shopping Centre, Victoria. [Photo by Wpcpey / CC BY-SA 4.0]

In a move that will sharply affect low-income earners, students and the elderly, Telstra’s lowest-cost pre-paid options will see the largest cost increases. The price of pre-paid recharges offering one week of phone service and a two-gigabyte data cap will rise 20 percent from $10 to $12 (albeit with three gigabytes of data), costing an extra $104 per year. Telstra’s most expensive $89 per month plan will increase in price by 6.7 percent, meaning these high-end customers will pay an additional $72 annually.

Goldman Sachs analyst Kane Hannan hailed the price increase as “good news for investors,” as it “will drive strong financial year 2024 revenue growth,” building upon the company’s already growing financial figures.

Telstra’s mobile earnings increased 13.6 percent to $2.2 billion in the December half of 2022. In February, Telstra CEO Vicky Brady presented shareholders with a half yearly report, in which she boasted of “strong and continued growth.”

Income was $11.6 billion, up 6.4 percent. Earnings before tax and other costs was $3.9 billion, up 11.4 percent. After-tax profit for the six months was $900 million, meaning the company is on track to beat its 2021–2022 full-year profit of $1.8 billion.

Not content with increased revenue alone, Brady assured shareholders that she “remained committed” to Telstra’s $500 million T25 cost-cutting and job-slashing restructure.

The latest round of cuts was announced in February. Telstra will slash 113 jobs, mostly in retail, where 189 staff are being asked to reapply for just 83 positions. The company says the “store-based retail operations specialist role” will be eliminated and more than 30 tasks will be automated.

This will not be the last of the job cuts. A Telstra spokesman told the Australian Financial Review in March that, while the company did not have “job reduction targets under T25,… we have always said that we expect some workforce reductions as technology and customer needs change.”

In an email to the Communications Workers Union (CWU) in February, a Telstra employee relations manager warned that the company’s consumer and small business segments, Telstra Enterprise and Products and Technology, will also be restructured to reduce roles “where work is no longer required.”

Although the CWU has limited coverage over Telstra retail employees, it has treated these job cuts as a matter of fact. In its February 12 news bulletin under the heading of “Redundancies,” the union said it had met with Telstra and clarified that there were to be no redundancies in the Broadband/Optical Fibre area. “The redundancies arise in the Retail area,” the bulletin said.

Telstra has also announced that it will transfer around 100 field workers from its InfraCo segment to the Global Business Service division, making them a “suitable offer.” Workers who refuse to accept this “suitable offer” will be forced out with reduced termination entitlements.

This should serve as a stark warning to all CWU members, including those working in parts of Telstra where the union has a larger presence. If the corporatised union bureaucracy is willing to accept the destruction of more than 100 jobs in one part of the business and a major restructure in another, it will not hesitate to enforce cuts throughout Telstra and the communications sector more broadly.

Early last year, the CWU worked hand-in-hand with Telstra management to impose sell-out enterprise agreements that slash real wages and formalise the division of workers into separate business units. The union bureaucracy adopted a “neutral” position, tacitly endorsing the management deal containing nominal pay increases of just 2.5 percent in the first year and 3 percent in the second. At the time, the official inflation rate was already at 5.1 percent and rising rapidly.

Aside from slashing wages, Telstra’s aim from the beginning of negotiations was to move from a single agreement covering the whole enterprise to separate agreements for each business unit. The CWU shut down members’ concerns about signing onto separate agreements and delivered to Telstra what it wanted. Under Australia’s draconian Fair Work Act, Telstra workers will now be barred from taking unified industrial action to defend the jobs and rights of their colleagues in other business units.

The latest job and wage cuts are part of Telstra’s T25 business growth strategy, which follows the T22 cost cutting restructure launched by former CEO Andy Penn in June 2018. T22 slashed $2.7 million in annual costs and more than 8,000 permanent positions over four years, along with 1,600 indirectly employed workers.

In 2021, Telstra established a wholly owned infrastructure business unit called Telstra InfraCo. Infrastructure assets, along with close to 3,000 employees, were transferred to this business unit which then sold its services to Telstra, wholesale customers and the government-owned national broadband network NBN Co.

This was then split into four subsidiaries: InfraCo-Fixed (the physical infrastructure assets including the fibre and exchanges that form Telstra’s fixed telecom network), InfraCo-Towers (mobile network tower assets), ServCo (the customer-facing side) and Telstra International (international business including undersea cables).

These shareholder-driven developments will inevitably mean further attacks on the jobs and working conditions of Telstra employees.

The major restructure, along with the thousands of jobs destroyed by T22 and the just-beginning cuts under T25, would not have been possible without the complete collaboration of the CWU bureaucracy. But this is nothing new—the union has demonstrated over decades that it will impose every demand of Telstra and its financial backers.

The CWU, previously known as the Communication Electrical and Plumbing Union (CEPU), has overseen the destruction of tens of thousands of jobs since Telstra (then Telecom Australia) carried out its “Project Mercury” restructuring, which was launched with the backing of the Keating Labor government in 1993.

In 1980, Telstra had a workforce of around 90,000. By 2015, this had been slashed to 36,000 full-time employees and 38,000 contractors. Today, the company has just 26,000 full-time workers and 19,000 contractors.

Behind Boric’s defeat and strengthening of fascists in vote on Chile’s constitution

Mauricio Saavedra

On May 7, Chileans went to the polls for a second time to decide on replacing the country’s authoritarian constitution after the first proposed redraft, falsely coined by the liberal press as the “most progressive constitution in the world,” was resoundingly rejected last September.

The pseudo-left coalition government of President Gabriel Boric suffered a punishing defeat in the latest compulsory elections. Boric’s governing coalition, Unidad para Chile (Unity for Chile), which includes the Communist (PCCh), Broad Front (FA), and Socialist (PS) parties, barely managed to win 16 of 50 seats to the constitutional council—an insufficient number to block proposals, much less make changes to the current charter. This is in keeping with the declining approval rating for the administration, which according to polls is now languishing at under 30 percent.

Boric and Defense Minister Maya Fernandez Allende at Navy ceremony days after Navy personnel beat to death a homeless man. [Photo: Gobierno de Chile/Twitter]

The election also saw the traditional center-left wiped out. The traditional center-left coalition Todo por Chile (All for Chile), which, allied with the PS, had governed since the return to civilian rule, did not win a single seat, demonstrating yet again that this political corpse is kept alive through artificial means, namely their incessant and overrepresented coverage in the bourgeois press and by Boric placing them in leading positions in his cabinet.

In an ominous sign, the political party to receive the most votes was the fascistic Republicans, a choice that Chilean capitalism has opted for in the past. The Republican Party, founded in 2019 by José Antonio Kast, the son of a Nazi German officer and admirer of US president Donald Trump, won 23 seats on the constitutional council. 

With the 11 seats of Safe Chile (Chile Seguro), the coalition of ultra-right, free-market forces that include the political heirs of the dictatorship of Gen. Augusto Pinochet in the Independent Democratic Union (UDI) and National Renovation (RN) parties, the right wing will have a two-third’s majority, enabling them to maintain intact Pinochet’s constitution or insert even more authoritarian articles.

The victory of Kast, a Pinochetista with deep Nazi roots and a favorite of the corporate and financial world, rallied the markets. The Wall Street Journal enthused that “the Santiago stock exchange rose 2.3% as investors became more confident that Chile wouldn’t make far-reaching changes to an economic model they credit for years of strong growth.”

Kast boasted that “Chileans have gone to the ballot box to give a strong and clear signal about the path that they want for our country.” 

Kast’s triumphalism is contradicted by the immense number who either consciously voided their ballot (more than 2.1 million voters who rejected all the lists!), left their ballots blank (over half a million voters), and who abstained despite threat of a hefty fine (almost 2.3 million people.) Altogether they accounted for a third of the 15.1 million-strong electorate.

This is under conditions where the working class confronts an increase in the official unemployment rate to 8.8 percent, a 24 percent increase in the cost of the basic food basket over the last year, wage readjustments below inflation for most of the last two decades and a fiscal monetary policy that cut spending by 23 percent in 2022.

The results indicate that the country not only remains deeply polarized, as it was in 2019 when an incipient revolutionary situation erupted to the surface, but that the Communist Party and the Broad Front, brought forward to save capitalism, are in record time becoming a spent force. 

Four years after the 2019 mass rebellion, the Chilean and international working class have entered a new stage in the struggle against mass unemployment, deepening social inequality, high interest rates and skyrocketing inflation, amid a criminally negligent response to the COVID-19 pandemic and the drive towards war between nuclear armed powers.

Chile’s constitutional process: a cynical bid to divert the class struggle

The profoundly cynical exercise to change the constitution was initiated three years ago as a conscious attempt by the political establishment to bring to a close the historic anti-capitalist demonstrations that swept the country in 2019 and which created the sharpest crisis of bourgeois rule since the mid 1980s.

In November of 2019, the Chilean parliamentary “left” entered into national unity talks with the beleaguered administration of right-wing president Sebastian Piñera to prevent it from collapsing. 

With a new lease on life, the government shifted even further to the right, initiating a slate of law-and-order measures that would mark the remainder of its tenure, and of Boric’s from the beginning. 

Firstly, with Congressional approval, Piñera decreed a state of exception with the onset of the COVID-19 pandemic, curtailing freedom of movement and assembly. This placed the military in charge of checkpoints across the entire country, and curfews were imposed. These measures did nothing to protect the population from the virus that has killed over 61,000 and infected millions. Their purpose was to intimidate the population.

Piñera then sent to Congress a train of bills criminalizing social protest and allowing for violent crackdowns on working class communities, student protests and wildcat strikes. He also sent a dozen bills concretizing the police state. The all-encompassing bills included the strengthening of the intelligence apparatus by unifying the various departments from the armed forces and police and allowing for the mobilization of the military to secure “critical” public and private infrastructure. 

Finally, Piñera stepped up an age-old campaign against the impoverished indigenous Mapuche communities, placing the southern region of Chile under a State of Exception in October 2021. The attack on the indigenous population was coupled with a vile anti-immigrant witch-hunt, which became one of the electoral issues around which all of the political parties sought to outdo each other.

It was in this polarized climate that Boric and Co. came forward. With the help of the corporatized trade unions dominated by the Stalinist PCCh and pseudo-left FA coalition, as well as their Morenoite satellites, Boric recycled for purely electoral purposes the false national reformist nostrum that the capitalist state, as a supposed arbiter of irreconcilable class contradictions, can gradually regulate the market at the national level and rein in the excesses of capitalism.

The World Socialist Web Site warned that the parties of the so-called “left” were committing a monumental fraud, especially the Stalinist PCCh, the second-oldest political party in Chile. As part of the Popular Unity government under Salvador Allende they had decapitated a revolution by straight-jacketing the embryonic workers’ councils (cordones industriales) and other independent workers’ initiatives, opening the way for the fascist-military coup in 1973.

In October 2020, over 80 percent of the population voted in favor of a referendum to change the constitution imposed under Pinochet’s fascist civilian-military dictatorship and maintained by the traditional center-left.

Similarly, in the May 2021 elections for the 155 seats in the constitutional convention, the right and old center-left parties were reduced to a rump, while Stalinist, pseudo-left and Morenoite-aligned “progressive” academics, social activists, union bureaucrats, and middle class radicals won a two-third’s majority.

While only 40 percent of the eligible electorate voted, those who did so overwhelmingly sought candidates who promised to inscribe into the nation’s new charter guarantees to public health, education and pensions, an end to extreme social inequalities, a redistribution of wealth, environmental protections, an end to police repression and an expansion of rights.

Identity politics was a centerpiece of the pseudo-left’s campaign from the beginning of both the constitutional convention and the presidential election at the end of 2021. Touted as the most “progressive” constitution by swathes of the pseudo-left internationally and sections of the professional middle class and academia, its central thrust was to increase the size of the state, creating a new indigenous bureaucracy and guaranteeing gender parity in the civil service and the state. 

In this vein, a deceitful campaign was launched to promote the PCCh-FA “Approve with Dignity” electoral pact as the only progressive means of preventing the coming to power of the fascistic Kast in the December 2021 presidential run-offs.

Fourteen months in office

Well before the March 11, 2022 inauguration, the Stalinist-pseudo-left “Approve with Dignity” (Apruebo Dignidad) coalition had revealed its true colors and modus operandi—Gabriel Boric, the face of the new administration, makes endless appeals for “dialogue,” a euphemism for accommodating his government with imperialism, the ultra-right and fascists, while brutally repressing the class struggle. His partners in the PCCh, meanwhile, issue demagogic denunciations of imperialism and the right.

On foreign policy Boric has openly aligned himself with the strategic objectives of US imperialism against Russia. He accused Russia of launching a war of aggression, while voicing no opposition to US-NATO expansion or Washington’s stated aim to inflict a strategic defeat upon and dismember the Russian Federation. With an equal display of toadyism, Boric denounces Cuba, Nicaragua and Venezuela for “authoritarianism,” but stays mum about the greatest threat in the Western Hemisphere, the United States. 

Domestically the pseudo-left administration has complied with finance capital’s demands by further integrating the old center-left political caste into his government and by implementing a fiscally tight monetary policy, ending stimulus programs to aid working and middle class families as inflation reaches levels not seen since 1992.

In the 14 months since coming to office, the pseudo-left government has also implemented the police state laws of the previous government. Boric’s reaction to the outbreak of hunger riots, ongoing school occupations, strikes and indigenous land seizures in the course of the year has been to unleash the Carabinero special forces and deploy the Armed Forces—the institutions at the center of human rights violations on an industrial scale in the past 50 years.

The Boric administration has expanded the arsenal of the Carabinero forces as part of a 4.7 percent increase in the public order and security budget and ceded to the military an increased role in public order functions, including their deployment to protect “critical infrastructure.”

A permanent State of Exception has been decreed for the regions of Biobío and La Araucanía. This is a continuation of the militarization policy begun by the Piñera government, where the armed forces are being used in the southern regions against the indigenous Mapuche populations claiming ancestral lands. 

More recently, the government ordered the deployment of the armed forces to the Peruvian and Bolivian borders. The measure authorizes the armed forces to use force against mainly undocumented Venezuelan, Haitian and Colombian refugees fleeing humanitarian catastrophes caused by years of instability, largely caused by US imperialist sanctions and meddling. Refugees began detouring into Chile in 2016 when their destination of choice, the US, was closed off by the resumption of mass deportations by the Obama administration, which has only escalated under Trump and Biden today.

The military is backing police patrols at the borders with Bolivia and Peru and is allowed to use lethal force against refugees. The scenes of Colombian and Venezuelan migrants being violently man-handled by Chilean and Peruvian forces in the Tacna-Arica regions that caught international media attention has become the new normal.

The most far reaching law—known as “Naín-Retamal”—gives the military and police a license to kill and provides retroactive legal immunity from prosecution for use of excessive and lethal force. Already, several cases have been dismissed by the courts. 

Apruebo Dignidad’s shift from pledges to initiate “transformative” changes to police state measures should serve as a lesson to the working class and the youth internationally as to the role of the pseudo-left and its promises of social reforms through the capitalist state.

More astute bourgeois politicians have recognized that the level of alienation and disenfranchisement revealed in the latest elections, coupled with a deepening economic crisis, portends social convulsions. So with much fanfare Congress passed three pieces of legislation that on the surface appear social reformist. The first reduces the working week from 45 to 40 hours. The second gradually increases the monthly minimum wage from the current 400,000 pesos ($502 in current US dollars) to 500,000 (US$628) by mid 2024. The third is a mining royalty bill that establishes a maximum tax burden on large mining operations that will collect up to US$450 million.

The devil is in the details however. While more will be written on these laws, the first enshrines the further flexibility of labor and threatens penalty rates. The second does not reach the poverty line. The third has loopholes that allow the mining industry to avoid paying the paltry sums the law proposes to collect.