Military tensions rise in South America after Venezuela claims oil-rich region controlled by Guyana

Guilherme Ferreira

After the government of Venezuelan President Nicolás Maduro claimed the oil-rich Essequibo region controlled by Guyana through a referendum held on December 3, military tensions in South America have escalated. Military operations have been carried out by the US and planned by the UK with the Guyana Defense Forces, and Brazil, the region's largest country, sent troops and arms to the border region with Venezuela and Guyana.

US and Brazilian officers review troops at close of Southern Vanguard military exercise in November

In an international context dominated by the US and NATO war against Russia in Ukraine, and Israel’s genocide backed by the imperialist powers in Gaza that threatens to engulf Iran, Venezuela and Guyana are aligning themselves with rival sides of a future third world war.

Since the government of former president Hugo Chávez (1999-2013), Venezuela has maintained strong economic and military relations with China, Russia and to a lesser extent Iran, countries that the head of the US Southern Command (SOUTHCOM), Laura Richardson, denounced in October as “strategic competitors [of the US] who have malign intentions” in South America.

In a telephone conversation between Maduro and Russian President Vladimir Putin on December 21, both defended “a fair multipolar world order” and “the rejection of illegal sanctions,” which have been used by US imperialism to undermine both countries economically and to attempt regime change. Putin also advocated Venezuela joining BRICS, a bloc formed by Brazil, Russia, India and South Africa, which recently included Iran and seven other countries to counter US hegemony.

On the other hand, Guyana, a former British colony and member of the Commonwealth that in recent years has seen soaring economic growth due to huge offshore oil reserves discovered and exploited mainly by the American company Exxon Mobil, has sought the support of the US and the UK against the threat of annexation by the Maduro government. Having guaranteed “unwavering support” for Guyana, the Pentagon carried out an air operation in Essequibo on December 7, and Guyanese President Irfaan Ali has repeated that he may allow the US to install a military base in the country.

On Sunday, December 24, the United Kingdom announced the deployment of the warship HMS Trent to Guyana for military exercises with its Defense Force. This follows the SOUTHCOM-sponsored military exercise Tradewinds 23, held in July, which for the second time in the last three years was hosted by Guyana and saw the participation of 21 countries, including the United Kingdom and Brazil.

Venezuela’s defense minister, Vladimir Padrino López, responded that same day by writing on X/Twitter that the British initiative is a “provocation that puts the peace and stability of the Caribbean and our America at risk.” He added: “A warship in waters to be delimited? ... What about the commitment to good neighborliness and peaceful coexistence? What about the agreement not to threaten or use force against each other under any circumstances?”

López was referring to the agreement reached between Presidents Maduro and Ali on December 14 in Saint Vincent and the Grenadines, whose president, Ralph Gonsalves, heads the Community of Latin American and Caribbean States (CELAC). According to the agreement, the two countries undertook “not to make threats or use force,” but rather to seek solutions to the crisis in accordance with “international law” and the “peaceful coexistence and unity of Latin America and the Caribbean.” Another meeting is scheduled to take place in Brazil within the next three months.

Despite the claims in the final declaration, the crisis is far from over. Ali has insisted that the “International Court of Justice (ICJ) will decide the dispute over the borders between Guyana and Venezuela,” whose origins date back to the 19th century. The Maduro government, however, has insisted that it does not recognize the ICJ’s jurisdiction, and that Guyana did not have the right to grant oil exploration concessions to Exxon Mobil in a disputed territory.

The government of Brazilian President Luiz Inácio Lula da Silva (Workers Party – PT) has been working closely with the US government of President Joe Biden to mediate the crisis between Venezuela and Guyana. Due to the possibility of an invasion by Venezuela crossing through Brazilian territory, the Lula government’s defense minister, José Múcio, has warned, “if a more energetic ‘you won't pass here’ is necessary, we are prepared for it.”

This has led the Lula government to escalate its military presence as a deterrent to any Venezuelan initiative in the sensitive Amazon region bordering both countries. He has moved up by two years the transformation of the 12th Mechanized Cavalry Squadron in Boa Vista, capital of the northern state of Roraima, into the 18th Mechanized Cavalry Regiment, which will increase the number of troops from 230 to 700.

Sixteen armored tanks and dozens of surface-to-surface missiles similar to the American Javelin, widely used by Ukraine against Russia, are also being sent to Boa Vista’s military base.

Since the fraudulent impeachment of PT president Dilma Rousseff in 2016, the Amazon region has been the stage for military exercises with the participation of the US armed forces. In 2017, Brazil and the US, alongside Peru and Colombia (which host most of the US bases in Latin America), carried out the first war games in the region. The military exercise marked a new stage of the US imperialism’s “pivot to Latin America” offensive to counter China’s growing presence in the region.

In 2020, under the government of fascistic President Jair Bolsonaro, a close ally of then-US President Donald Trump, the Brazilian armed forces held the largest military exercise in the Amazon region, simulating a war with an “enemy country,” with clear reference to Venezuela. It took place amid increasing US threats against the Maduro government and the largest recent US military deployment in Latin America.

Since Lula’s inauguration earlier this year, his government has deepened its military partnership with the US while providing criminal political cover for the Biden administration as it tries to assert US imperialism’s strategic interests in the region it historically considers its “backyard.” As part of this process, 1,200 Brazilian military personnel and 300 American military personnel carried out a military exercise between November 1 and 16 on the border between Brazil and French Guiana—the same Amazon rainforest environment as the triple border region between Brazil, Venezuela and Guyana.

According to Brazilian Gen. Luciano Guilherme Cabral Pinheiro, head of the Northern Military Command, the aim of the Combined Operation and Rotation Exercise (CORE) was to “expand interoperability” between the armies of Brazil, the US and “forces made up of NATO member countries,” in addition to “ensuring that the Brazilian Army is trained to take part in international operations.” Since 2019, Brazil has been a “Major Non-NATO Ally,” a position surpassed only by Colombia, which since 2018 has been the only Latin American country to be a “global partner” of NATO.

The crisis between Venezuela and Guyana has been used by the Bolsonaro-led opposition to the Lula government to advance a proposed constitutional amendment that increases the defense budget from 1.1 percent to 2 percent of Brazil's GDP. The measure, however, is also being promoted by leading officials in the Lula government, including its Defense Minister. If approved, the measure would add to an investment of 53 billion reais (11 billion US dollars) already announced by Lula in July to boost the national defense industry. These actions are at the core of the PT’s bourgeois nationalist answer to the tensions with the Brazilian armed forces that emerged in the attempted fascist coup on January 8.

Maduro's claim to Essequibo is based on the capitalist character of his “Bolivarian” government. The Venezuelan bourgeoisie doesn’t want to be left out of the exploitation of oil, and Maduro’s administration sees the enterprise as a way of boosting a severely deteriorated economy and profiting politically ahead of the general elections scheduled for next year. His government also reportedly intends to reactivate PetroCaribe, a partnership between Venezuela and 16 Caribbean countries for the sale of oil and fuel at favorable prices. Launched in 2005 by the Chávez government, it was virtually halted due to US sanctions in 2019.

Despite the Maduro government's anti-imperialist rhetoric, which has mainly targeted Exxon Mobil’s actions in Essequibo, it has relentlessly sought a diplomatic rapprochement with the US. Seeing oil exploitation in Venezuela, the country with the largest known reserves in the world, as a way of minimizing the Ukraine war’s impact on global fuel prices and of undermining oil exportation to China, the US government has slightly relaxed its crippling economic sanctions on Venezuela over the last year. 

At the same time, Washington sees the relaxation of sanctions against Caracas as a way of getting its candidate, María Corina Machado, into next year’s general elections. This process has also been overseen by Brazil, which has mediated negotiations between the Maduro government and the US-backed Venezuelan opposition.

In the latest move toward rapprochement between Venezuela and the US, an exchange of prisoners was announced on December 20. Venezuela released 30 prisoners, including two former members of the US armed forces who took part in an operation in 2020 to overthrow Maduro, and Roberto Abdul, a member of the commission that coordinated the opposition primaries. In exchange, the US released Alex Saab, a former Venezuelan diplomat convicted on trumped-up money laundering charges.

Maduro’s claim on Essequibo has nothing to do with the interests of the Venezuelan working class, let alone the workers of Guyana. Amid a growing domestic crisis, Maduro is trying to deflect a series of internal tensions outwards and, responding to growing geopolitical tensions, to stay in power and guarantee the interests of a sector of the Venezuelan bourgeoisie that has benefited from Chavismo since 1999.

2023: The year of the total COVID cover-up

Evan Blake

Registered nurse Erin Beauchemin monitors an Extracorporeal Membrane Oxygenation (ECMO) machine connected to a patient in the COVID-19 Intensive Care Unit at Harborview Medical Center Friday in Seattle. (AP Photo/Elaine Thompson)

As the year 2023 draws to a close, the contrast between the objective reality of the ongoing COVID-19 pandemic and the delusional fantasy promoted by capitalist politicians and the corporate media has never been greater.

Surveying the official political and media landscape in the US and throughout much of the world over the holidays, there is virtually no mention of the pandemic anywhere. The last time President Joe Biden even publicly referred to COVID-19 was in September, when he jokingly flaunted White House and CDC masking requirements after being exposed to his infected wife Jill.

After two years of continuous efforts to minimize the Omicron variant and all of its progeny as “mild,” the unstated policy towards the pandemic is now simply to ignore it.

Significantly, one of the only recent articles to break this wall of silence was a Washington Post Editorial Board statement titled, “Face it: A ban on ski masks can help fight crime without violating rights.”

While feigning concern over a rise in crime involving the use of ski masks, the article makes clear that the underlying aim is to illegalize all masking in public, including the use of face masks that are one of the most important public health measures to prevent the spread of COVID-19. The editorial endorses a proposal floated by Washington, D.C.’s Democratic Mayor Muriel E. Bowser to impose a “prohibition on ski masks and face coverings.”

The editorial noted that DC removed restrictions on face coverings “in 2020 to encourage the use of face masks during the coronavirus pandemic.” But, the statement concludes, “masks can be read as antisocial in the most basic sense.”

As has happened so many times over the past four years, this Post article signals what will likely soon become the official policy of the Biden administration. The banning of masks is the logical next step in the American ruling class’ drive to enforce their “forever COVID” policy, in which all of society is subject to unending waves of mass infection, debilitation and death. As stated bluntly by Anthony Fauci in August, the elderly and vulnerable will simply “fall by the wayside.”

Contrary to the official narrative that “the pandemic is over” and society must “learn to live with the virus,” the truth is that COVID-19 remains a substantial public health threat which must be addressed. This objective reality can now only be cognized through the work of independent scientists who continue to monitor viral transmission through wastewater sampling, viral evolution, estimates of excess deaths, and the impacts of Long COVID.

In the US, wastewater data from Biobot Analytics show that at present viral transmission nationally is rapidly approaching the second-highest level to date, behind only the initial wave of the Omicron BA.1 subvariant exactly two years ago.

According to the model of Dr. Mike Hoerger of Tulane University, current wastewater levels translate to roughly 1.66 million Americans being infected with SARS-CoV-2 daily, with 11.4 million people (1 in 29) now actively infectious. By January 10, there will be roughly 2 million daily new cases in the US, with nearly 14 million infectious people.

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An even higher percentage of the population is currently infected in England and Scotland, where an estimated 4.2 percent of the population were infected with COVID-19 in the two weeks leading up to December 13, equivalent to roughly 2.55 million individuals or one in 24 people.

Similar spikes in transmission have been recorded in the Baltic and Nordic countries, Germany, Poland, Singapore, Canada and elsewhere.

This global wave of mass infection is being fueled by the Omicron JN.1 subvariant, a descendant of the highly-mutated BA.2.86 variant (nicknamed “Pirola”) which is now dominant globally and was deemed a “variant of interest” by the World Health Organization (WHO) last week. Throughout much of the developing world, wastewater data are entirely unavailable, but it is safe to assume that JN.1 is causing similar spikes in transmission internationally.

Tracking excess deaths attributable to the pandemic has become increasingly difficult, as numerous countries have shifted their baseline to include 2020, thereby skewing their data. The Economist’s excess deaths tracker, long the most reliable, has not been updated since November 18. At that point, their cumulative total of excess deaths stood at a staggering 27.4 million people, roughly four times the official figure of 7 million.

In the US, the CDC stopped reporting excess deaths in September. One of the only up-to-date trackers using pre-pandemic figures as the baseline is run independently by health expert Greg Travis, whose figures indicate that excess deaths remain significantly above pre-pandemic levels, in particular for younger age groups.

Thousands of scientific studies make clear that COVID-19 is the underlying cause of the vast majority of these excess deaths. The virus has been proven to persist in myriad body tissues, with the ability to damage virtually every organ, manifesting in over 100 different symptoms that are often debilitating. A COVID-19 infection places one at greater risk of heart attack, stroke, kidney disease, various neurological disorders, and more.

The WHO itself estimates that one in 10 infections leads to Long COVID and multiple studies have shown this risk is only compounded by reinfections. With each new wave of mass infection, the immense crisis of Long COVID only broadens in scope, with hundreds of millions now believed to be suffering globally.

Among the most alarming impacts of COVID-19 are those on the cardiovascular system, as highlighted in a study published last week in iScience titled, “Predicted risk of heart failure pandemic due to persistent SARS-CoV-2 infection using a three-dimensional cardiac model.”

The study created the first in vitro model of cardiac tissues impacted by SARS-CoV-2, finding that the virus “persistently infects the heart opportunistically causing cardiac dysfunction triggered by detrimental stimuli such as ischemia.” The authors conclude that “the population at risk of future heart failure due to persistent infection of SARS-CoV-2 is expected to exponentially increase.”

Graphical abstract from study, "Predicted risk of heart failure pandemic due to persistent SARS-CoV-2 infection using a three-dimensional cardiac model" [Photo by Kozue Murata,Akiko Makino,Keizo Tomonaga,Hidetoshi Masumoto / CC BY 4.0]

This echoes a similar warning made over a year ago by cardiologist Dr. Rae Duncan, who stated, “I am very concerned that we are going to have a tsunami of cardiovascular complications including heart attack and strokes and vascular dementia over the next few decades.”

None of this scientific reality is brought to the attention of the world’s population, who are instead systematically lied to by the powers-that-be. Throughout the pandemic, science has been continuously distorted and held hostage by an unholy alliance between governments, corporations, the media and the trade unions, all of which are now colluding to enforce the “forever COVID” policy.

Over the course of the past two years, following the evolution of the highly infectious and immune-resistant Omicron variant in November 2021, there has been a total evisceration of all public health response to the pandemic. By design, data collection and reporting on COVID-19 testing, hospitalizations and even deaths have steadily become totally inaccurate.

The year 2023 witnessed the culmination of this process with the WHO and Biden administration ending their COVID-19 public health emergency (PHE) declarations in May. This was combined with the complete privatization of the government’s responsibilities to test, vaccinate and treat the population.

As a result of the ending of the PHE in the US, at least 13.4 million Americans have been disenrolled from Medicaid, according to the Kaiser Family Foundation (KFF). Rapid antigen tests are unaffordable for most Americans, while more accurate PCR tests are nearly impossible to access. A growing number of Americans have had to pay over $100 for their latest booster shots, and in October, Pfizer announced that they intend to charge nearly $1,400 per five-day course of the life-saving treatment Paxlovid once the government’s stockpiles run out, likely in the coming year.

The ruling elites’ policy of simply ignoring the pandemic and forcing everyone to fend for themselves is untenable and will inevitably collide with reality. The basic functioning of society cannot sustain unending body blows of mass infection and debilitation with Long COVID.

The refusal of the ruling elites to address or even acknowledge the pandemic is a glaring sign of the dead-end of the capitalist system. The past four years of the pandemic have inured the ruling class to mass death, conditioning them to carry out the most savage barbarism. This is now on full display in the ongoing genocide of the Palestinians, carried out with utter ruthlessness and brutality, with the whole world watching live on social media.

The year 2024 will see a deepening of the global struggle against war, the pandemic and the capitalist system. There are growing calls for renewed mass protests against the genocide in Gaza, which have involved millions throughout the world over the past two months. In the US, tens of thousands have signed a petition appealing to the Biden administration to guarantee funding for Long COVID research, a sign of the intense ongoing opposition to the pandemic.

Volkswagen: Management and works council agree on a billion-euro cuts programme

Ludwig Weller & Peter Schwarz

Following months of secret talks, Volkswagen management and the works council agreed on December 19 on the concrete form of the drastic savings programme that the supervisory board had already decided upon on June13—also with the support of the so-called “employee representatives”.

German Chancellor Olaf Scholz, works council member Daniela Cavallo, VW CEO Oliver Blume and Lower Saxony’s Minister President Stephan Weil at a factory meeting in Wolfsburg in February 2023. [Photo by Volkswagen]

As early as next year, VW aims to save 4 billion euros on its core brand and as much as 10 billion euros by 2026. The return on sales is to increase from 3.4 to 6.5 percent as a result. The cost of this doubling of profits will be borne by the workforce.

Daniela Cavallo, chairwoman of the General Works Council, is continuing to hoodwink the workforce, claiming that most of the savings will now be achieved independently of personnel cuts. She deliberately did not give any figures on the jobs to be eliminated. The head of the VW core brand, Thomas Schäfer, also remained silent. Both claim that only financial targets are in question and that no plans for job cuts are involved. This is a lie.

Company management assumes that “a five-digit number of jobs,” i.e., at least 10,000, will be lost, as reported by the F.A.Z. newspaper. According to the agreement reached, costs in administration alone are to be reduced by 20 percent, which, according to the F.A.Z., means more than 4,000 jobs will be cut.

This job massacre is supposedly going to take place without “compulsory redundancies.” Cavallo claims that the agreed job security terms will remain in place until 2029, but this means merely that employees will be forced out of the company using other methods, e.g., partial retirement for those born from 1967 onwards, cancellation of agreements and unbearable work stress. In addition, the existing hiring freeze is being extended. The aim is to “maximise staff reductions in line with the demographic curve,” as the company puts it.

The reduction in staff goes hand in hand with a corresponding increase in work intensity. Here, too, Cavallo is being deliberately deceptive. “We will continue to ensure that processes, structures and tasks actually improve and become faster,” she explained, “because work intensification must not result.”

But that is exactly what the job cuts will entail. A drastically reduced workforce will inevitably lead to the “compression of workloads,” resembling conditions at Tesla with a faster pace of work, fewer breaks, overtime and extra shifts when required.

This “compression of workloads” affects not only production and administration but also the process of development and suppliers. The works council and executive have agreed on specific savings targets.

Two hundred million euros are to be saved in the coming year alone through shorter production times, i.e., an increase in the pace of work. Savings of 320 million euros are planned in purchasing, which will further accelerate the wave of bankruptcies and redundancies in the supplier industry. Medium-sized companies with hundreds of employees are already filing for bankruptcy every week, while the big players—Bosch, ZF and Continental—are cutting thousands of jobs. The engineering and car workers trade union, IG Metall, is deliberately playing off its members in auto production against their colleagues employed at suppliers.

The optimisation of “after-sales business”—spare parts, repairs and other services—is also expected to bring savings of more than 250 million euros, which will lead to additional redundancies.

In particular, the work intensity in the product development departments will intensify. One billion euros is to be saved here by 2028 by reducing the development time for new models from 50 to 36 months. For developers, this means long, sleepless nights and overtime.

Wage levels, which were already reduced to below the inflation rate via several previous wage deals, will also fall further in the coming years. It is not Tesla that will adapt to Volkswagen, but rather VW will adopt Elon Musk’s methods of exploitation.

Of course, IG Metall and the works council know all this. That is why they are trying to play down the social impact of these cutbacks. The assertion that the massive job losses and other cuts are necessary and unavoidable is a lie. Only those who line up on the side of management and its profit targets, not the side of VW workers, would argue in this way.

IG Metall and its works councils are experts in fleecing the workforce in order to drive up corporate share prices and profits. A recent insider report by Manager Magazin on a VW supervisory board meeting gave an insight into how the billionaire capital owners impose their profit requirements with the help of their henchmen, falsely called “employee representatives,” together with the social democratic (SPD)-Green state government of Lower Saxony.

Manager Magazin reports that at a meeting in mid-November, members of the supervisory board literally scolded VW boss Schäfer. “They didn’t like what he presented to the company controllers on job cuts, investment cuts and other cost-cutting ideas. Too soft, not well-founded enough, is how insiders summarised the criticism.”

Oliver Porsche, 62, and Günther Horvath, 71, in particular, as representatives of the major shareholder families Porsche and Piëch, repeatedly asked critical questions at the meeting and expressed their dissatisfaction. In the end, they humiliated Schäfer by demanding he revise his report and have it presented next time by a team from management consultant Roland Berger.

Not only management but also the works council bowed to pressure from the billionaire family clans whose fortunes go back to the crimes of the Nazis. What is now being presented is in line with their demands.

For years, VW has implemented one cost-cutting programme after another—all of them drawn up together with IG Metall and its works council and imposed on the workforce. It is time to draw the necessary conclusions. Jobs, wages and working conditions can only be defended independently of,and against the IG Metall bureaucracy.

To this end, action committees must be set up in which all VW workers who want to wage a serious fight join forces. These committees must be independent of the works council and IG Metall.

The threatened cutbacks at Volkswagen are part of an international attack on the working class. Big business and governments everywhere are attacking social gains and rights in order to finance the huge costs of militarism and trade war and drive up share prices.

2023: A year of financial turbulence

Nick Beams

The year is set to close with the US stock market at, or very close to, record highs after what has been a turbulent year for the financial system.

The rise on Wall Street, which has been boosted by the “dovish” turn by the US Federal Reserve at its December 13 meeting, is being fueled by market expectations of at least three and possibly as many as six interest rate cuts in 2024.

New York Stock Exchange [AP Photo/Richard Drew]

The surge is extending across the board. The Dow has hit seven record highs for the month and the S&P 500 is fractionally below its record high reached in January 2022 after posting a 34 percent rise from its low last year. And in what has been described as a “bond carnival” the world biggest debt market, that for US Treasuries, is on track to make its biggest two-month gain on record.

The tech-heavy NASDAQ 100 index is set to record its largest rise since 1999, at the height of the dot.com bubble. It is up 55 percent this year, fueled by the prospects of profits from artificial intelligence.

But the market frenzy is being accompanied by expressions of concern that the extreme volatility in the financial system, evident throughout the year, can spark major problems, if not a crisis.

“We have an ‘everything rally’ at the year’s end. The magnitude is breathtaking,” Sonja Laud, the chief investment officer at the UK’s largest asset manager Legal & General Investment, told the Financial Times (FT). “I’m worried about that. There’s no room for error.”

And, notwithstanding the euphoria in markets over the prospect of rate cuts, the effects of the steep rise in rates over the past 18 months—the Fed rate is now more than 5 percent after being near zero for more than a decade—are still flowing through the system and can cause sudden shocks.

No one, for example, predicted that the rises would lead to three of the four largest banking failures in US history in March, marked by the fastest run on deposits seen in history, and would require a major intervention by the Fed and government authorities to prevent a financial meltdown.

It is significant that one of the areas of greatest concern is the US Treasury market, where government debt is bought and sold. Now approaching $27 trillion it is the bedrock of the US and global financial system.

It is showing signs of increased volatility. In the middle portion of the year yields on 10-year bonds were rising as they were sold off—yields and bond prices move in opposite directions—in the expectation that the Fed was going to maintain its monetary policy tightening stance.

But as inflation numbers started to come down and wage demands continued to be suppressed by the trade union apparatuses, there was a rising clamour in the markets for rate cuts. At first the Fed appeared to resist these demands. But at the December meeting Fed chair Jerome Powell threw in the towel and made a pivot, just two weeks after insisting that the previous orientation would be maintained.

The result has been that the yield on the 10-year bond, which touched just over 5 percent in October is now down to around 4 percent and set to go even lower. Such rapid movements in a market where shifts of fractions of a percentage point can be significant, is indicative of instability.

Another cause of concern which has emerged this year is the so-called basis trade where big bets are made exploiting the slight difference between bond prices and what they will fetch in futures markets. Because the differences are so small traders need to borrow large amounts of money to make the operation profitable.

In a recent post on his Chartbook site, economic historian Adam Tooze noted that regulators were “particularly concerned” about the speculative character of the trade in which a hedge fund employs a minimum of its own money and a maximum of borrowed money.

The amounts involved are large, more than half a trillion dollars.

“According to one set of estimates,” Tooze wrote, “in December 2022 the hedge funds owed $553 billion on basis trade borrowing and were leveraged at a ratio of 56 to 1. This creates the potential either for widespread losses in the credit system or major hedge fund failure.”

The numbers involved have almost certainly gone up this year, creating the risk that the failure of even one fund can set off a “dash for cash” and the kind of “doom loop” that developed in the UK in October 2022 when falling bond prices forced pension funds to sell bonds to raise cash, sending prices even lower.

But as Tooze noted, even as regulators seek to intervene, they are to a great extent operating in the dark because “we don’t know all that we might about how the Treasury market and its working.”

Even if they start to come down, interest rates are likely to remain well above the near zero level to which they fell after the financial crash of 2008 and the Fed’s policy of quantitative easing involving the outlay of trillions of dollars as it bought government debt.

US government debt, boosted by increased government spending on war and the military is reaching new record highs—it now stands at more than $33 trillion. But the interest bill on this debt is rising rapidly and is now the third largest item of government spending after Medicare and Social Security.

As military spending continues to rise this has led to heightened calls for cuts in key areas of social spending. In other words, the attacks on the social position of the working class must be deepened so the ever-increasing war expenditure is financed, and the holders of Treasury debt are paid.

The latest rise in the stock market and the prospect that it could climb even further has created an atmosphere of euphoria. But closer analysis reveals it is highly unstable.

Back in the 1960s and 1970s Wall Street was driven by what was known as the “nifty fifty”—the cohort of high value stocks which brought good returns.

Those days have long gone, and the market is now dominated by the so-called “magnificent seven.” These comprise the big tech names, Apple, Microsoft, Alphabet (the owner of Google), Amazon, Telsa, Meta (the owner of Facebook) and Nvidia.

So top heavy has the market become that at the midpoint of the year the price of these stocks had risen by between 40 percent and 180 percent and were responsible for all the increase in the S&P 500 index in the year to that point as all the others remained flat. Since then, others have joined the “everything rally” but the Mag7 continue to dominate and account for 64 percent of the rise in the S&P.

As the FT recently noted: “Their size is now so pronounced that they do not dominate just US stocks, but a large slice of the performance of global equity markets too.”

This high degree of concentration of financial power, which has accelerated this year, is reflected in the banking sector as well. In the first nine months of the year, according to analysis carried out by the FT, based on figures compiled by an industry tracker, JPMorgan Chase took in almost 20 percent of US bank profits. This was up from around 12 percent a year earlier.

Its earnings have exceeded those of its rivals Bank of America and Citigroup combined and in the words of one Wells Fargo analyst “JPMorgan is the Goliath of Goliaths.”

However, as Wall Street and finance capital in general, salivate on the prospect of cheaper money there are signs of weakness in the underlying economy. Commercial real estate is starting to feel the effects of higher interest rates, consumer spending is being hit by inflation as wages continue to lag, corporate bankruptcies are on the increase, rising by 30 percent in the 12 months to September compared to a year earlier, and mass layoffs are taking place, particularly in high-tech.

Beneath the surface of the present celebrations in financial markets all the conditions which led to the turbulence of 2023 have not gone away but are continuing to intensify.

Baroness Mone PPE scandal deepens crisis of UK Conservative government

Robert Stevens

The scandal involving Conservative Party Baroness Michelle Mone is throwing oil on the fire of the deepening crisis of the Sunak government.

Mone admitted in a December 17 interview with the BBC’s Laura Kuenssberg that she stands to benefit from tens of millions of pounds of profit from personal protective equipment (PPE) sold to the UK government during the pandemic by a company led by her husband, Doug Barrowman.

Michelle Mone presenting to Anglia Ruskin University in Chelmsford, April 2013 [Photo by B Milnes / CC BY-SA 3.0]

Tens of billions of pounds in get-rich-quick COVID contracts were handed out from Westminster from the first days of the pandemic, with almost £20 billion awarded without any form of tendering. Government cronies in big business made a killing. Mone’s support helped PPE Medpro secure a place in a “VIP lane” used during the COVID pandemic to prioritise companies. PPE Medpro secured contracts worth more than £200 million.

Vast amounts of the PPE supplied by the private sector profiteers during the height of the pandemic was not fit for purpose. The government is suing PPE Medpro for a breach of contract, after rejecting the surgical gowns for which it paid £122 million. PPE Medpro maintained the gowns had been fit for purpose.

A separate civil case was launched by the Department of Health and Social Care (DHSC) and the House of Lords commissioner for standards launched another investigation into whether Mone had breached the Lords’ code of conduct.

Mone, who fronted a lingerie company, shot to prominence in the Tory Party when she was appointed “Tsar” for business start-ups in David Cameron’s government and then elevated to the House of Lords in 2015.

It is established that the highly politically connected Mone contacted, on May 8, 2020, then Cabinet Office minister Michael Gove and fellow Tory peer Theodore Agnew, offering to supply PPE. Agnew referred PPE Medpro to the “VIP lane”.

In June 2020, PPE Medpro was awarded two PPE deals by the Department of Health—one for £122 million for 25 million sterile surgical gowns and one for £89 million for the supply of 210 million face masks. A HSBC bank paper trail establishes that in September 2020 Barrowman received at least £65 million in profits from the PPE deal. These profits were transferred to The Warren Trust, registered in the Isle of Man, with Barrowman the beneficial owner.

In December last year Mone took a leave of absence from the House of Lords in order to “clear her name”. This followed a series of exposures the previous month—led by the Guardian—indicating that Barrowman had transferred £29 million to an offshore trust, the Keristal Trust, of which Mone and her three adult children were the beneficiaries.

Mone had always insisted that she did not stand to benefit from the PPE deal and denied any role in it being awarded. Mone and her husband had clearly decided by the time of the BBC interview that it was no longer possible to maintain this fiction.

Barrowman said the deal created £60 million profit which was now in a family trust. Half of this is the Keristal trust, from which Mone and her children stand to benefit unless she and Mr Barrowman divorce. Mone will be able to access the millions if her husband dies first.

Kuenssberg asked Mone, “Your family as a unit will benefit from that cash. Why didn’t you just be more straightforward about it?” Mone responded, “I’m saying to you that I didn’t receive that cash. That cash is not my cash, that cash is my husband’s cash, we are married.”

She then told Kuenssberg, “If one day, if God forbid, my husband passes away before me, then I am a beneficiary, as well as his children and my children, so yes, of course.”

It is ludicrous to claim that Mone would not benefit from any such profits for years to come. Barrowman is a billionaire and Mone is a multi-millionaire herself. Until this year the couple lived in a luxury £19 million London townhouse. Barrowman has also put his 127ft yacht Lady M—named after Mone—on the market.

Mone admitted, “I did make an error in saying to the press that I wasn’t involved. Hindsight is a wonderful thing. I wasn’t trying to pull the wool over anyone’s eyes, and I regret and I’m sorry for not saying straight out, yes, I am involved.” She added that lying to the media was “not a crime”.

As justification Mone explained, “I was just acting the same way as every other baroness and lord who were also putting names forward.”

Barrowman and Mone are implicitly threatening to spill the beans on wider governmental corruption that resulted in an estimated £4 billion in taxpayers’ money being spent on unusable PPE.

Over a month prior to the BBC interview the Guardian reported that representative of Barrowman had said, “The UK government was fully aware of Baroness Mone’s involvement; like many other peers and MPs on the high priority lane, she acted as an intermediary/liaison between PPE Medpro and the Cabinet Office/Department of Health and Social Care.”

Following this Mone was interviewed by the pro-Tory Telegraph in a piece headlined, “Baroness Mone: The PPE scandal made me ashamed to be a Tory – I am purely a scapegoat.” The underline read, “Entrepreneur launches fightback over PPE equipment investigations with startling counter-allegations”.

This was the occasion for the launch of a YouTube programme, “The Interview: Baroness Mone and the PPE Scandal”. The programme was paid for by PPE Medpro and fronted by investigative reporter Mark Williams-Thomas.

The Telegraph revealed that Barrowman and Mone have a recording from after 2021—when they were in mediation with Department of Health and Social Care—in which a government official is alleged to have told them, “Obviously we understand you’ve made an offer and it’s a sizeable sum of money. We’re just trying to piece together… and thinking through… and I think our view at the moment, and where we stand, is it is probably not likely to be enough to call the dogs off.”

Barrowman gave more details in his interview with Kuenssberg saying, “We get to November 2022, and I attend this negotiation, as opposed to a mediation.

“It’s very, very clear that, you know, they’re interested in settling but they want a sum of money that, quite honestly, we are not of a mind to pay.

“So, I then have a separate meeting, and this individual asked me would I pay more for the other matter to go away.” Barrowman added, “I was absolutely gobsmacked—I think it raises very serious questions as to what that official meant, what he was saying.”

Asked by Kuenssberg why he did not go to the police with the allegation, Barrowman stated, “I take the advice of my legal team, and the legal team at that point in time suggested that we park that one for now.”

The government responded by seeking to wash their hands of the growing stench. Interviewed by Sky News' Kay Burley on whether someone who had admitted to lying should be allowed back into parliament, energy minister and Tory peer Martin Callanan said, “It is a matter for her to decide... [but] I would hope she would not be coming back to the House of Lords.”

Deputy Prime Minister Oliver Dowden defended the government’s handling of PPE procurement, insisting there were “no favours or special treatment”, while stating that Mone was not being made a scapegoat.

Labour’s Shadow Health Secretary Wes Streeting said that no-one watching the BBC’s interview with Mone would be “shedding any tears”, adding, “There’s a fundamental point of principle here, which is, in the midst of a deadly pandemic, when so many people rushed to help others in all sorts of ways… and then there were others who saw the pandemic as an opportunity to make a quick buck at someone else’s expense… Our message to those people who sought to use the pandemic to get rich quick [is]: we want our money back.”

This is nauseating. While the crisis reveals the staggering level of profiteering that took place as the ruling class exploited a pandemic for financial gain, utilising government PPE policies that contributed to hundreds of thousands of deaths, the filthy operation could only take place because Labour, first under Jeremy Corbyn and then Sir Keir Starmer declared that the “task as the Opposition” was to “support the government’s public health efforts while being constructively critical.”

UN report finds Sri Lanka’s social inequality among the worst in Asia

Saman Gunadasa

The recently issued United Nations Development Program (UNDP) report—“Making Our Future: New Directions for Human Development in Asia and the Pacific”—has revealed the depth of social inequality in Sri Lanka.

A market place in Colombo, Sri Lanka, December 8, 2023. [AP Photo/Eranga Jayawardena]

Presenting the UNDP report on December 14, the UNDP’s Sri Lankan economist, Dr. Vagisha Gunasekara, explained that Sri Lanka was one of the top five countries in the Asia-Pacific region in terms of wealth inequality. Other countries exhibiting the highest wealth inequality in the region include Thailand, China, Myanmar, India.

She added: “Sri Lanka is a country with fairly high-income inequality; we are in the top one third of the highest unequal countries in the world, and wealth inequality is also very high.”

The economist continued: “The top one percent of Sri Lankans own 31 percent of the total personal wealth, while the bottom 50 percent only owns less than 4 percent of the overall wealth in the country. This provides us with a snapshot of how unequal our country is.”

The UNDP report noted: “South Asia saw its wealth Gini index rise from 0.71 to 0.77.” [The Gini coefficient is a measure of the distribution of income or wealth among people in a country. A Gini coefficient of 0 means perfect equality, while 1 means total inequality—that is, all wealth is held by one person.]

Report explained that it is a “serious concern” that share of the bottom 50 percent of the population in many countries in the region does not even exceed 6 percent of the total wealth. The richest 10 percent of society continues to enjoy more than 50 percent of total wealth.

The UNDP report noted that the COVID-19 pandemic and ensuing shutdowns affected around half the region’s informal workforce. Many countries suffered serious losses in income from tourism, remittances and manufacturing which employ a large number of informal workers. “In South Asia and South-East Asia in particular, the shocks exposed the weaknesses of healthcare systems.”

“Then came the war in Ukraine and the ensuing cost-of-living crisis.” The war in Ukraine, combined with the pandemic “led to a broad decline in the human development index in all sub-regions except for East Asia.”

According to the UNDP report, the indebtedness in the country is disastrously deepening; 31 percent of Sri Lankan households depended on loans; 24 percent are dependent on money lenders and 23 percent on bank loans. As of June, the country’s staggering household debt reached more than 7 percent of the GDP.

When Sri Lanka’s economic crisis was exacerbated by the COVID-19 pandemic, layoffs and wage cuts were legalised as necessary to maintain big business profits. Accordingly, more than half a million jobs were lost.

The Sri Lankan situation is part of global developments. Wealth inequality in South and South-East Asia is chronic and human development is also at an extremely unequal level.

Commenting on India, the most populous country in the world, the UNDP report stated that income distribution has become more skewed. “The top 10 percent of the population get 57 percent of national income and the top 1 percent get 22 percent—one of the most unequal income distributions.”

The top 10 percent controls 65 percent of the nation’s total wealth in India. In the post-2000 period, there was growing evidence of a strong rise in wealth inequality in that country.

In Sri Lanka, when President Gotabhaya Rajapakse imposed the burden of the country’s unprecedented economic crisis on the masses, a popular uprising erupted last year involving millions of workers and rural poor. Although Rajapakse was forced to flee the country and resign, the capitalist class was able to temporarily stabilise its rule as a result of the betrayals by the trade unions and pseudo-left groups.

Ranil Wickremesinghe was elevated into the presidency, with the backing of the Rajapakse’s discredited Sri Lanka Podujana Peramuna party. His government has imposed the harsh austerity measures dictated by the International Monetary Fund (IMF) leading to worsening living conditions and social inequality.

By the end of 2022, food inflation reached 90 percent and general inflation reached 70 percent. Prices have not gone down, but have continued to rise. The IMF-dictated program for the sale, privatisation or closure of 430 public sector institutions will destroy another half a million jobs.

Corporate taxes are kept low while exorbitant taxes are levied on working people. Chief among these are a higher income tax, value added tax (VAT) and various import duties. From the beginning of 2024, VAT will be increased from 15 to 18 percent and will be applied to 97 essential goods including fuel, cooking gas and fertiliser.

The IMF staff report released this month, after completing the first review on the bailout program of $US3 billion to Sri Lanka, admitted indirectly that the country’s growing social crisis was partly the result of the IMF’s policies.

“Social unrest could re-emerge, fueled by falling real incomes, including from tax rate hikes and cost-recovery pricing in the energy sector, insufficient anti-corruption efforts, and delayed local elections,” it warned.

The staff report repeatedly expressed this concern and pointed to the impact of the worsening global situation: “External risks arise in part from intensified regional conflicts, including Russia’s prolonged war in Ukraine and the conflict in the Middle East, resulting in commodity price volatility, and a sharp global slowdown, which could reduce capital flows and reserve accumulation and lead to sharp exchange rate depreciation.”

Whatever the catastrophic situation facing workers and the poor, the IMF insists that its program has to be implemented to the letter. Its concern is to ensure the repayment of Sri Lanka’s foreign debts and the boosting of the profits of investors.

Speaking in the parliament on December 13, President Wickremesinghe repeated his mantra: “There is no alternative other than implementing IMF policies.”

All the opposition parties, including Samagi Jana Balawegaya (SJB) and National People’s Power (NPP) led by Janatha Vimukthi Peramuna (JVP) are committed to the IMF policies.

Replying to a question from the state minister for finance, SJB leader Sajith Premadasa told the parliament: “We are going to renegotiate the IMF deal.” The simple truth is, however, that the IMF will not renegotiate its austerity agenda.

The NPP/JVP leader keeps repeating that people are hostile to Wickremesinghe implementing the IMF program. In the same breath, however, he insists “people will allow a new government [under the NPP] two years to implement the rigorous program to come out of the crisis.”

The trade unions aligned with the SJB and the JVP are now campaigning for a new government led by the opposition parties as a means of undermining workers’ struggles to defend their jobs, wages and pensions and to oppose privatisation.

Mexico’s AMLO vows to “strengthen measures” against migrants as mass caravan faces repression

Andrea Lobo

At a high-level summit Wednesday, the Biden administration requested that the government of Mexican President Andrés Manuel López Obrador (AMLO) escalate repressive measures to stop migrants and refugees from reaching the US-Mexico border. 

Secretary of State Antony Blinken and Foreign Secretary Alicia Barcena meet outside of Mexico's Presidential Palace, December 27 [Photo: @SRE_mx]

At the meeting, which took place in Mexico City and was convoked by AMLO, Secretary of State Antony Blinken, Homeland Security Secretary Alejandro Mayorkas and National Security advisor Liz Sherwood-Randall reportedly asked the Mexican government to place more checkpoints along the main routes and railways, to forcibly move migrants to southern Mexico and offer more visas to stay in Mexico. 

The Mexican president said he was eager to “assist” Washington and had already agreed in a call with Biden to “strengthen containment measures in the southern part of the country.” Details will emerge in the coming days of what was agreed to on Wednesday. 

AMLO, his Foreign Secretary Alicia Barcena and other officials embraced and joked with Blinken, who has spent weeks leading US efforts to secure economic and political support for the fascistic Israeli regime of Benjamin Netanyahu in its massacre and starving to death of Palestinians in Gaza.

In fact, the summit was an offshoot of talks to secure Congressional approval of a $110 billion package that offers Republicans a greater crackdown on migrants in exchange for the bulk of the money going to escalate the war against Russia in Ukraine and the US-Israeli genocide in Gaza.

Similarly to how the Biden administration insists that it has no “red lines” for Netanyahu, it is not committed to any set of principles regarding its own treatment of migrants and refugees. The only real and major obstacle to employing open, mass violence as a “solution” to unrelenting migration is the American working class. AMLO’s hypocritical lamentations reflect similar fears about the Mexican working class.

The Biden administration also reportedly plans to raise the credible fear standard for asylum seekers to even be able to present their case to a judge and to allow the shutting down of the border to all asylum claims and fast-tracking removals once an arbitrary level of crossings is reached. Such policies would further worsen the numbers and plight of those stuck in Mexico.

As the summit was taking place, nearly 10,000 migrants of over 20 nationalities from all over the world were marching behind a large banner emblazoned with the words “Exodus of Poverty.”

They are among the hundreds of thousands stuck for months in southern Mexico, unable to get travel visas to take buses or other means of transportation or a formal work permit to pay for the journey. Meanwhile, the administration is demanding ways to make it even harder for them to move north.

On Wednesday, marchers carried out a protest, kneeling and praying in front of the migration offices of Huixtla, Chiapas, when the National Guard soldiers temporarily blocked their path.

One migrant then gave a speech: “The doors have been closed to us. This movement is a peaceful movement, and we are not going to fall into provocation. We are poor and that is why we do not have the documents because the documents are given to those who have money, corruption is the mother of the National Institute of Migration.” 

After walking about 45 miles since Sunday morning, the caravan was arriving at Escuintla, Chiapas, in southern Mexico, with reports already of dehydration and sores.

The “Exodus of Poverty” caravan demonstrates that the so-called “legal pathways” set up by the Biden administration, including forcing migrants to apply from third countries and meet economic requirements, were merely a cover for illegally dismantling the right to asylum. 

Meanwhile, the Mexican authorities could process asylum and work permits by sending migrants to offices in other regions but they are deliberately saturating the offices in Chiapas, forcing migrants to remain in the south without food, shelter, money or access to healthcare. 

Horror stories about migrants, which are the deliberate consequences of these policies, often dominate news coverage in Mexico. On Saturday, a day before Christmas Eve, two young men drowned in mud thick with garbage in the Rio Grande as they attempted to cross from Matamoros to Brownsville, Texas. The incident was recorded on video, and their relatives can be heard crying and yelling in horror from the shore.

Such official cruelty has not stopped record numbers of migrants from reaching the Rio Grande, however. Apprehensions by the US Border Patrol averaged 10,000 migrants per day during the first week of December. This year is expected to see 2.5 million migrants processed by the Border Patrol—the third consecutive yearly record. 

Shortly before meeting Blinken, López Obrador recited his usual sanctimonious concerns about the “poor countries” in the region.

“We have to avoid putting people at risk, because these are very dangerous journeys,” he added, as tens of thousands of heavily armed soldiers he has ordered to “contain” migrants have a record of shooting at, robbing and extorting migrants, as well as connections to gangs and cartels. 

The dangers faced by migrants cannot be overstated. Biden and AMLO are emboldening—and the Democratic Party, Morena and their pseudo-left apologists bear the chief political responsibility— the fascists in the US who are preparing an even more brutal onslaught. 

Leading Republican candidate Donald Trump, who led the January 6 fascist insurrection to establish a dictatorship, is vowing to carry out an unprecedented assault since “day one” to deport millions of migrants yearly.

Having threatened to act like a “dictator” during his first day in office and used Hitlerian rhetoric claiming migrants are “poisoning the blood of our country,” Trump has reportedly drawn up plans to deploy hundreds of thousands of troops to the US-Mexico border, ostensibly to build massive detention camps, according to Rolling Stone.

A source told the magazine “I have heard anywhere between 100,000 to 300,000 from President Trump, Stephen Miller, and others.” 

The agenda of imperialist war is intertwined by countless threads with attacks on refugees and migrants and the struggles of the working class. The onslaught against the democratic rights of migrants and the associated buildup of the repressive state apparatus serve as preparations to crack down on mass working class opposition to the genocide, war and the attacks on social spending, jobs and living standards used to pay for them. 

Billions of dollars more are being discussed for the repressive US border and deportation apparatus, while the Biden administration and Republican and Democratic governors have invoked “border security” to deploy thousands of troops along the border. Both parties are already running roughshod over the Posse Comitatus Act that prohibits active-duty troops from carrying out law enforcement activities domestically.

For his part, AMLO is demanding funds within Mexico and from his patrons in Washington for his own military build-up, with migrant “containment” operations used to maintain a permanent presence of troops across Mexico’s borders and in the interior. The Mexican president betrayed his longtime promise of sending the military to the barracks by instead enshrining its domestic deployment in the constitution.