Central Banks face interest rate dilemma

Nick Beams

Amid all the back and forth in the markets and second guessing about where interest rates will go it is clear that central banks, led by the US Federal Reserve, want to ensure that wage rises are firmly suppressed before they start to make cuts.

At the same time, they want to reassure the financial markets that rate cuts will be undertaken.

This is because the longer the present higher interest rate regime continues the greater the danger of financial problems erupting. This is due to the dependence of many areas of the financial system on the near-zero interest rate regime which prevailed for almost a decade and a half after the global financial crisis of 2008.

Smaller and regional US banks have already been hit—three of them failed last March threatening a “systemic crisis”—and there have been warnings of a looming crisis in commercial real estate.

Fed chair Jerome Powell tried to thread this needle in his appearance on the CBS program 60 Minutes on Sunday night.

He gave an assurance to the markets that the Fed still expected to make around three rate cuts this year, each of a quarter percent, saying that “almost all” members of the Federal Open Market Committee thought rates should be cut.

The so-called “dot plot” in December, in which members of the FOMC chart where they expect interest rates to go, showed they expected that rates would be down by three quarters of a percentage point at the end of the year.

The next projections are not due until the FOMC meeting of March 20, but Powell said “nothing had happened in the meantime that would lead me to think that people would dramatically change their forecasts.”

He also sought to dampen market expectations of imminent cuts—at one point there were forecasts of six rate cuts this year starting in March.

“There is no easy, simple, obvious path,” he said. “We think the economy’s in a good place. We think inflation is coming down. We just want to gain a little more confidence that it’s coming down in a sustainable way.”

Powell did not spell out what would give the Fed “more confidence.” Nevertheless, commentary in the financial media has indicated what is required is evidence of growing slack in the labour market and that wage rises are kept down.

That relationship was underscored by the release of Bureau of Labor Statistics data on Friday which showed the US economy added 353,000 jobs in January—almost double what was expected. That meant Wall Street immediately ruled out any prospect of a March interest rate cut.

The central banks cannot openly state that their central objective in meeting inflation is not, and never has been, the enormous profit gouging by giant corporations, especially in the areas of food, energy and other necessities, but the suppression of the wages and living standards of working class. To admit that truth would expose the fiction that they serve the interests of the public.

However, the ruling classes themselves need to be informed as to what is taking place, so some of the real issues are revealed, as least partially, in sections of the financial press.

In a recent article entitled “Why central bankers are reluctant to declare victory over inflation,” the Financial Times commented: “Central bankers around the world had begun preparing for rate cuts on the back of steadily weakening inflation. But as the US jobs numbers demonstrate, hot labour markets are the biggest potential barrier to them hitting their 2 percent inflation goals.”

What this means is that rates will not come down until central bankers can have confidence that the wage demands of workers, just to compensate for the price hikes imposed by the corporations, have been suppressed.

While it is never mentioned, the chief mechanism for achieving this goal in the US and elsewhere is the role of the trade unions in imposing sub-inflationary pay agreements.

Commenting further on the wage issue, the FT article noted that continued progress in the disinflation story hinged on the fate of labour markets.

“While the initial declines in inflation were driven by external factors, progress now depends on the more difficult task of depressing domestically generated price growth. That will be harder if jobs and wage growth stay too robust.

“Economists say squeezing out the last vestiges of excess price growth might require policymakers to maintain persistently tough policy that further suppresses demand.”

The risk here, despite all the official claims that the financial and banking system is “sound and resilient,” is that the persistence of higher rates can lead to a crisis.

European Central Bank at Frankfurt, Germany [Photo by Thomas Wolf / CC BY-SA 3.0]

The issue of wages was likewise front and centre at the meeting of the European Central Bank on January 25—so much so that ECB president Christine Lagarde could hardly talk of anything else when she came to discuss inflation.

This was so obvious that one journalist asked at her press conference whether “it is fair to assume that the focus on wages means that you need to see wage growth falling before you are prepared to cut rates.”

Lagarde did not directly respond to the question, but the answer was yes.

As the FT noted, the ECB rate-setters “have made it clear that their key focus in the coming months will be on wage settlements and whether they are compatible with the 2 percent inflation target.”

“The worry at the ECB and elsewhere is that workers will demand big pay rises to restore the purchasing power they lost during the initial spikes in prices.”

Like Powell, her counterpart in the US, Lagarde is particularly concerned about the services sector where wages make up a large portion of total costs.

At the Bank of England, governor Andrew Bailey has raised the prospect of an interest rate cut, but the central bank has warned that while the labour market has cooled it remains “tight by historical standards.”

The same issue came up in the decision by the Reserve Bank of Australia yesterday to leave interest rates on hold and to warn increases could not be ruled out. The RBA said while conditions in the labour market continued to ease, they remained tighter than was consistent with “inflation at target.”

The class struggle is rarely, if ever, mentioned directly in central bank pronouncements. But like an uninvited guest, it is ever present at their deliberations.

In all the commentary, there are frequent references to the mistakes of the 1970s when the then Fed chief Arthur Burns lowered interest rates. This action, it is maintained, fueled inflation.

However, the overriding concern arising from that historical experience is that rising prices led to an eruption of major struggles by workers around the world for pay increases that shook the political establishment.

Under conditions of the most significant inflation since then, amid growing financial instability, the fear is that unless such struggles are suppressed through the actions of the trade union bureaucracy, supported by the various pseudo left tendencies, the consequences will be even more serious for the entire capitalist order.

Ford reports $10.4 billion in 2023 profits, outlines plan to cut jobs

Jerry White

Ford Motor Co. made $10.41 billion in profits in 2023, according to figures released by the Dearborn, Michigan-based auto giant Tuesday. This included $1.1 billion in the fourth quarter last year, underscoring the virtually negligible impact of the “stand up” strike overseen by the United Auto Workers union bureaucracy. 

The company made $7.5 billion and a 7.3 percent profit margin from its Ford Blue division, which is centered on the company’s traditional internal combustion engine vehicles. It made another $7.2 billion and a staggering 12.4 percent profit margin at its Ford Pro division, which manufactures commercial vans and heavy-duty work trucks. 

Like many other automakers, the company has failed to turn a profit from electric vehicles despite massive federal government subsidies. Ford reported losing $4.7 billion in its Ford Model e division in 2023. CEO Jim Farley predicted that it would still take several years to turn a profit from EVs, but this depended on drastically reducing the costs and prices to compete with Tesla and Chinese EV manufacturers.

In a conference call with analysts from Morgan Stanley, Bank of America, Deutsche Bank and Barclay’s on Tuesday, Farley boasted, “Despite the UAW strike, our auto profits were up year-over-year.” He said Ford would be “returning capital to our shareholders through a regular and special dividend.” Chief Financial Officer John Lawler told investors that whenever the regular dividend “doesn’t reach 40-50 percent, we will provide a supplemental dividend.”

Reuters summed up the company’s earnings report in an article titled “Ford slows EVs, sends a truckload of cash to investors.”

While the wealthiest shareholders swallowed up roughly half of Ford’s $6.8 billion in free cash flow last year, 58,000 UAW members are being forced to “share” the equivalent of less than 9 percent. Under the UAW’s “profit-sharing” scheme each Ford worker will be issued a check averaging $10,400, a sum which will be significantly reduced by taxes and union dues.

Top UAW officials condescendingly “congratulated” workers on producing the profit bonanza for Ford. UAW Vice President for Ford Chuck Browning wrote in a letter to workers, “UAW Ford members play a key role in the success of the company through expertise, extraordinary efforts, and commitment to the jobs they perform each and every day.”

“UAW President Shawn Fain and I extend well deserved congratulations and share deep appreciation for our hard-working UAW members at Ford,” the letter concluded.

On Tuesday’s earnings call, Ford executives said the UAW strike had only led to the loss of 90,000 vehicles, a minuscule figure compared to the nearly 2 million vehicles the company sold last year. Ford Chief Financial Officer Lawler said the strike cost the company $1.7 billion last year, a drop in the bucket compared to the $176 billion in revenue the company accrued in 2023, which was up 11 percent from the year before.

UAW President Fain only called out 16,600 Ford workers—or little more than a quarter of the membership at the company—at various times during his six-week “stand up” strike. The impotent action only affected three of the company’s nine assembly plants. More than half the strikers—8,700 at the Kentucky Truck Plant in Louisville—were only out for two weeks before the UAW announced a deal and sent strikers back to work before they even saw the proposed contract. 

Ford CFO Lawler said any marginal increases in costs next year due to the UAW’s supposed “record” contracts would be more than offset through “efficiencies” in manufacturing, labor and material costs. He said the company expected to make $10-12 billion in profits in 2024, despite continued losses from EVs. 

Farley said the company had rushed into EV production to catch up to Tesla after the COVID-19 pandemic first hit. But after the “COVID shock retreated,” he said, customers were not willing to pay a significant premium for EVs. Company executives involved in EV development and production would be “ruthlessly focused on costs,” Farley said, “to compete with Tesla and Chinese manufacturers.”  

Ford has delayed the construction of a second EV battery plant in Kentucky, shrunk the capacity of its planned battery plant in Marshall, Michigan, and cancelled a battery plant in Turkey. At the same time, the company was “rethinking our vertical integration” plans, Farley said, in a clear threat to spin off operations, shut plants and lay off tens of thousands of workers. 

While “aligning production” with fluctuating demand, he said, there would be no turning back from the transition to EVs in the global auto industry. “This is a seismic change,” Farley said, and the way corporations responded to cost pressures would “sort out the winners and losers in our industry.” 

The agreements signed by the UAW bureaucracy have given Ford and other automakers a free hand to wipe out tens, if not hundreds, of thousands of jobs through the transition to less labor-intensive EVs. The deals were crafted in collaboration with the Biden administration, which is massively subsidizing the transition to EVs as part of its escalating economic and military confrontation with China. 

The Biden administration and the auto bosses are relying on the UAW to suppress opposition to job cuts and ensure that the companies have a low-cost and “flexible” workforce, which can be moved from plant to plant depending on the demand for gas-powered, hybrid or fully electric vehicles. 

Within weeks of the ratification of the contracts, all three automakers initiated a wave of permanent job cuts and temporary layoffs. Ford cut production of its F-150 Lightning electric pickup truck in half and reduced operations at the Rouge Electric Vehicle Center (REV-C) plant in Dearborn, Michigan, from three shifts to one. By April 1, 1,500 REV-C workers will have to transfer to other plants, or take early retirement or “voluntary separation” packages. 

Striking Ford Michigan Assembly workers on September 27, 2023

Ford has adopted a practice of forcing REV-C workers to line up at the manager’s desk at the beginning of each shift to see who is going to work that day, a variation of the brutal “shape up” system that was long used on the docks. “Extras” are kept on the shop floor to take the job of anyone who agrees to go home, workers in the plant have reported to the World Socialist Web Site. 

“Everybody’s job is on the line”

Commenting on the company’s profit reports, a member of the Ford Rouge Rank-and-File Committee told the WSWS, “I warned workers that the company was saving money during this bogus strike. We did not hurt them at all. They saved money then, and they’re saving even more now by cutting all these jobs. I asked management if they were going to bring back the C shift and they said ‘never’ and that I was lucky to be working 40 hours, like the layoffs are going to continue. Everybody’s job is on the line.”

While Ford is cutting thousands of jobs, the remaining workers are facing backbreaking speed up. “I almost burned out yesterday. The line was going so fast that the video displays were flashing ‘Danger,’ and the union reps didn’t do anything about it.” 

Zelensky confirms planned purge of Ukrainian military leadership

Jason Melanovski

Ukrainian President Volodymyr Zelensky confirmed on Sunday that he was planning a wholesale purge of the top Ukrainian military leadership in an interview with Italy’s RAI TV. Zelensky conducted the interview only a few days after a meeting at which General Valery Zaluzhny reportedly refused to step down as commander-in-chief of the Ukrainian army and accept a minor position. 

Reports of Zaluzhny’s firing first emerged early last week, and then were quickly backtracked by Zelensky government officials following an outcry on right-wing Ukrainian social media, which views Zaluzhny as the “savior” of the nation. When questioned about the ongoing reports of Zaluzhny’s imminent firing by RAI TV, Zelensky responded that “a new beginning is necessary” and that the Ukrainian people want “a reset.” 

Zelensky went on to substantiate reports that Zaluzhny’s firing would be part of a larger purge by Zelensky of both the top military leaders as well as within the Ukrainian government.

“I have something serious in mind, which does not concern a single person but the direction of the country’s leadership,” Zelensky said. He added that this “reset” involved “replacement of a series of state leaders, not just in a single sector like the military.”

In the interview, Zelensky also belatedly admitted that the war was now at a “stalemate” after previously criticizing Zaluzhny for characterizing the war as such in the Economist earlier in November. “As far as the war on the ground is concerned, there is a stalemate, that’s a fact”, he said. As is typical of the Ukrainian ruling class, Zelensky then blamed the setbacks in the war on insufficient Western military support, stating, “there have been delays with equipment, and delays mean mistakes.”

The interview with RAI TV was preceded by a report in the Washington Post on Friday indicating that Zelensky had informed the Biden administration of his plans to dismiss Zaluzhny ahead of the meeting on Monday. Unnamed officials “familiar with the discussion” claimed that the Biden administration “did not support or object to the high-stakes decision.” However, with over $75 billion in US military aid sent to Ukraine since the beginning of the war in February 2022, such feigned disinterest cannot be taken at face value. A report by BBC Ukraine last week claimed that there had been direct intervention by Western officials to prevent Zaluzhny’s dismissal.

As the Washington Post itself reported in October 2023, Zaluzhny maintains very close ties with retired General Mark Milley, the former Chairman of the Joint Chiefs of Staff in first the Trump and then the Biden administration from 2019 to September 2023, who spoke with Zaluzhny for hours in regular calls following the outbreak of the war. Zaluzhny is also known to cultivate close relations with the country’s far-right and is an avowed admirer of Nazi-era Ukrainian fascist leader Stepan Bandera. 

Shortly after his attempted ouster by Zelensky, Zaluzhny published an op-ed on CNN, in which he wrote that Ukraine has “to contend with a reduction in military support from key allies”. He advocated a new “strategic vision” for the war, which had to include “high-tech assets” for the army and means to “reduce the economic capabilities of the enemy, or to isolate, or wear him down.”

The struggle and purge within the top military leadership already extends beyond Zaluzhny.

Last Monday, Ukrainian news outlet Ukrainska Pravda reported that in addition to firing Zaluzhny, Zelensky also planned to dismiss Chief of the General Staff Sergey Shaptala. Amidst the reports, Zaluzhny posted a photo of himself in Facebook with Shaptala wishing him a happy birthday. “We still have a very difficult path ahead, but we can be sure that we will never be ashamed,” Zaluzhny cryptically wrote. On the same day, Yuliia Laputina, Ukraine’s Minister for Veterans’ Affairs offered her resignation to Zelensky.

The exact reasons for the bitter conflict between Zaluzhny and Zelensky are unclear and reports about their differences have been contradictory. Veteran investigative reporter Seymour Hersh reported on Friday that Zelensky planned to fire Zaluzhny due to his participation in secret talks with American and other Western officials over negotiating a ceasefire with Russia. Hersh cited one official as saying, “Of course, Zelensky knew that Zaluzhny was dealing with the West. But Zelensky will be a dead man walking with the army, which is in favor of the general. He’s going to have a mutiny on his hands.”

By contrast, the Washington Post reported that Zaluzhny had been the one pressuring Zelensky to draft another half a million men into the army. In fact, this is what Zelensky claimed when he announced the new round of mobilization, but Zaluzhny publicly denied this claim. According to the Post, “In a tense Monday meeting, Zaluzhny argued that new recruits were needed to make gains on the battlefield in the face of Russia’s superior firepower and troop strength, said people familiar with the conversation. Ukraine also needed to prepare for personnel losses, which are expected to be comparable to last year’s, he said.”

The conflict between the top army leadership and the Zelensky administration in Ukraine is unfolding under conditions of a serious military, political and economic crisis. Over the past two years of war, Ukraine has lost at least 400,000 men on the battlefield, the equivalent of about 1 percent of its pre-war population. Many more were wounded, with many of them crippled. Meanwhile, the territorial gains especially of the 2023 NATO-backed counter-offensive, which cost billions of dollars and at least 125,000 lives, have been minimal. In addition to the staggering loss of human lives, Ukrainian workers are battered by inflation. Since October, families and friends of soldiers have staged protests demanding their return from the front, an initial but significant sign of growing anti-war sentiments in the population.

Now, the Ukrainian government is drafting another half a million men into the army while the military and military intelligence have launched strikes deep into Russian territory. Meanwhile, there are no indications that the situation on the battlefield is changing in favor of Ukraine and its NATO-armed military. 

On Sunday, reports emerged from Ukrainian journalists that Russian forces are continuing to gain the upper hand in the city of Avdiivka, which is strategically significant. Control by Kiev grants Ukrainian forces the ability to hit the heavily populated Donetsk with artillery and potentially attempt to “retake” the city, which has been under Russian-backed separatist control following the NATO-backed coup of elected President Viktor Yanukovych in 2014. 

However, according to the embedded Ukrainian war journalist Yuroy Butusov, who maintains ties to far-right armed groups, ammunition shortages continue to plague Ukrainian forces in the battle for the town. “Avdiivka needs fresh reserves and rotation of units of the heroic 110th Brigade, which maintains control despite absolute exhaustion after almost two years of continuous fighting in the town,” he wrote on Telegram on Sunday. “We also need ammunition as supplies are also extremely low, and the enemy has a great superiority in munitions.”

On the same day that these reports were emerging from Avdiivka, Zelensky visited Ukraine’s 65th Mechanized Brigade near the front-line town of Robotyne in Zaporizhzhia Oblast in a very public appearance to drum up support among Ukrainian soldiers.

Robotyne was one of the few towns of any significance taken by Ukraine last August during its failed spring-summer counteroffensive that cost the lives of some 125,000 in just a few months time. There, Zelensky awarded troops with Crosses of Military Merit, a presidential award recognizing soldiers for personal bravery and courage during combat missions.

Signaling that he intends for Ukrainian soldiers to continue fighting in the NATO proxy war, Zelensky attempted to motivate his forces with an inspirational speech. “I am greatly honored to be here today. To support you and present awards. Such a difficult, decisive mission rests on your shoulders — to push back the enemy and win this war. I wish you this victory. I wish to do everything to make this victory faster,” Zelensky said.

Britain reneges on resettling Chagossians on Diego Garcia and returning islands to Mauritius

Jean Shaoul

UK Foreign Secretary David Cameron told the Foreign Affairs Select Committee last month that the resettlement of Chagossians back in their homeland, including on the island of Diego Garcia, was “not possible.”

In November 2022, the former foreign secretary, James Cleverly said that Britain was negotiating with Mauritius over the future of the Chagos Islands, including “resettlement of the former inhabitants of the Chagos archipelago,” while retaining control of Diego Garcia. Cameron’s statement caused shock and anger among the Chagossians who had welcomed Cleverly’s announcement as long overdue.

David Cameron speaks with the Prime Minister, Rishi Sunak as he is appointed as Foreign Secretary as the Prime Minister reshuffles his cabinet from 10 Downing Street. [Photo by Simon Dawson/No 10 Downing Street/Flickr / CC BY-NC-ND 2.0]

Cameron told the committee, “We face a very insecure and dangerous world and there is a need to maintain our security and strengthen our alliances to protect ourselves, and we should think of Diego Garcia in that context. It is an important national asset that we share with the Americans. Any negotiations we have with the Mauritians, the overriding question must be the security, safety and usability of this base. We must look at all risks that there could be in any change of circumstance and that is how we must proceed.”

His purpose is to ensure that the US’s military base on Diego Garcia, the largest island in the 60-plus Chagos Islands that lie halfway between Tanzania and Indonesia in the Indian Ocean, can continue to operate unimpeded. It also appears that London has dropped plans to hand the Chagos Islands back to Mauritius, citing “concerns” over its relations with China.

Cameron’s statement comes as the US and Britain have launched attacks on the Iranian-backed Houthis in Yemen. The US has also conducted strikes in Syria and has not ruled out hitting targets inside Iran. This rapidly expanding US-led war in the Middle East is part and parcel of the emerging global conflict involving Washington’s war against Russia in Ukraine and advanced military preparations targeting China. It is for this reason that the former prime minister, who held office from 2010 to 2016, was brought back into government, ennobled and appointed foreign secretary.

Diego Garcia houses one of the US’s largest airbases, with 4,000 US as well as British troops, which serves as a launching pad for its criminal operations in the Middle East. It played a crucial role during the Gulf War, the Afghanistan War, and the Iraq War. Washington views it as essential for maintaining delicate military balance in the Indo-Pacific region in the face of the rise of China and escalating disputes in the South China Sea and for maintaining the supply of oil from the Persian Gulf. Britain allowed the CIA to use Diego Garcia as a “dark site,” where it detained and tortured people and refueled extraordinary rendition flights, and recently extended the lease on the islands to 2036.

A US Air Force B-1B Lancer taking off from Diego Garcia as part of Operation Enduring Freedom during October 2001 [Photo: enior Airman Rebeca M. Luquin, U.S. Air Force]

Therefore, the UK’s mooted decision to return the Chagos Islands was always dependent upon Washington. Without a green light from the Biden administration, London, even if willing, would not dare to return them. Hence the British government will supposedly only return the Chagos Archipelago to Mauritius when “it is no longer required for defence purposes,” without indicating when that might be.

Britain’s purpose in granting Washington the 50-year lease on Diego Garcia in the 1960s—kept secret from both Parliament and the US Congress—was to secure an $11 million discount on the US-made Polaris nuclear weapons system, which Labour had pledged to scrap when in opposition. In 1973, the government forcibly removed the entire population of the Chagos Islands so that the US could establish a military base on Diego Garcia.

As Liseby Elyse, one of the Chagossians, who was 20-years-old and pregnant at the time, told the International Court of Justice (ICJ) in The Hague in 2018, Britain shut down the islands’ plantations and cut off food supplies. The Chagossians were told that they had to leave by ship by April 27, 1973 or slowly starve. She said, “We were like animals in that slave ship,” adding, “People were dying of sadness.” Her child was stillborn.

It was the investigative journalist, the late John Pilger, who first brought their plight to the world’s attention with his film Stealing a Nation in 2004. The 2,000 Chagossians were exiled in Mauritius and the Seychelles in the Indian Ocean and eventually the UK, where, denied support and compensation and subject to racial discrimination at the hands of officialdom, they have lived in impoverished conditions ever since. Some 50 years after expelling them, the British government finally announced in 2022 that the Chagossians could apply for British citizenship.

Ever ruthless and duplicitous in protecting Britain’s imperialist interests, in 2009 Gordon Brown’s Labour government unilaterally declared the Chagos Islands a Marine Protected Area (MPA), thereby outlawing fishing and the extractive industries, including oil and gas exploration. The MPA was deliberately created to prevent Chagossians from returning to their homeland by destroying their potential livelihoods. WikiLeaks cables exposed this ruse in 2011, once again earning its publisher Julian Assange the British government’s undying hatred.

The ICJ ruled that the separation of the islands from Mauritius, before it became independent in 1968 by Harold Wilson’s Labour government in 1965, and their subsequent incorporation into the specially created British Indian Ocean Territories (BIOT) violated the 1960 United Nations resolution 1514 banning the breakup of colonies before independence. The Court excoriated the UK’s method of gaining control over the islands as coercive and the removal of the residents to make way for the US base as “shameful” and urged the UK to end “its administration of the Chagos Islands as rapidly as possible.”

While the overwhelming majority of the UN General Assembly supported the ICJ, Britain with its customary imperial arrogance and hypocrisy—it routinely invokes the importance of international law against its foes—refused to accept the ICJ’s rulings and the UN decision.

This was not the first time Britain had defied the UN. In February 2016, Britain rejected a UN human rights panel ruling that WikiLeaks founder Assange—who sought asylum inside the Ecuadorean embassy in London due to his persecution by the Swedish and British authorities—had been subjected to “arbitrary detention.” This is in line with a broader assault, led by the US, on the institutional arrangements established in the aftermath of World War II viewed as an unacceptable constraint on the pursuit of predatory imperialist interests.

Following the ICJ’s ruling and the UN vote against Britain, Mauritius took the case to the UN International Tribunal for the Law of the Sea in Hamburg, which in 2021 likewise confirmed the legitimacy of Mauritius’s claim to the Chagos Islands, calling Britain’s continuing administration of the islands “unlawful”, and criticised its failure to hand the islands back. The ruling implies that the UK’s leasing of Diego Garcia to the US is also illegal.

Britain is determined to hold onto its remaining 14 colonial possessions and to support the US, which has five, in pursuit of their predatory geostrategic interests. It fears claims from the Mauritian government for compensation and the implications for other sovereignty disputes, including with Spain over Gibraltar and Argentina over the Falklands/Malvinas.

Cameron’s statement exposes once again the hypocrisy of the British government that has lambasted China for its abuse of democratic rights in Hong Kong and Xinjiang, while it uses humanitarianism as a pretext for wars waged in pursuit of its sordid commercial interests.

One year since the Turkey-Syria earthquake—Part 3

Hakan Özal & Ozan Özgür

March 31 local elections and the impending disaster in Istanbul

With local elections to be held at the end of March, Turkey has once again entered a period in which the candidates of the bourgeois parties list promises that are known in advance to be unrealizable. The focus of these elections will be Istanbul and the Marmara region, where 18.49 percent of the Turkish population lives and where, according to scientists, the probability of a major earthquake is very high.

Experts from the German Research Centre for Geosciences (GFZ) have highlighted the possibility of a 7.4 magnitude earthquake in the Sea of Marmara in their research analysing the tectonic structure of Turkey. According to Turkish Professor Naci Görür, one of Turkey’s most respected earthquake scientists, the risk of an earthquake in Istanbul at any time is 47 percent. “It is almost like tossing a coin,” he said.

Istanbul, Turkey, viewed from Çamlıca Hill on the Asian side of the Bosphorus strait [Photo by Alexxx Malev / CC BY-SA 3.0]

In another interview, he described the dangers facing millions of working people in Istanbul as follows: “A simple account: there are 1.6 million buildings. Let’s reduce all mortal cases to 1 percent in Istanbul. This means 16,000 buildings. Suppose that each building has four floors. It means 64,000 floors. If we assume two apartments on each floor, it means 128,000 apartments. Put four people in each apartment. Does it exceed 400,000 [deaths]?”

In 2021, Mahir Polat, a top official of the Istanbul municipality, said it is estimated that 200,000 buildings in Istanbul will suffer moderate to severe damage in the expected earthquake. Approximately three million people might be affected.

Housing in the Balat neighbourhood of Istanbul [Photo by Jwslubbock / CC BY-SA 4.0]

This means that around 16 million people in Istanbul and 24 million in the Marmara region are still living under great risk, but there is no official preparation to prevent even a much bigger disaster. This high level of contempt by the entire Turkish ruling elite toward working people in danger is despite the fact that only a year ago an official estimate of 60,000 people in Turkey and Syria died in much less densely populated urban areas.

Under these conditions, Murat Kurum has been selected as the Erdoğan-led AKP's candidate for the Istanbul Metropolitan Municipality. Kurum served as Minister of Environment, Urbanisation and Climate Change between 2018 and 2023. Through his actions, he not only shares political responsibility for the buildings that collapsed in the February 2023 earthquake, but also for making cities and residential areas across Turkey vulnerable to new disaster risks.

Murat Kurum visiting the European Commission, September 16, 2021 [Photo by Lukasz Kobus, European Commission]

Kurum served as the general manager of the state’s housing development administration’s (TOKİ) subsidiary Emlak Konut GYO A.Ş. between 2009 and 2018 before becoming a government minister. He has started his election campaign with commitments under the title of “earthquake-oriented urban transformation.” But during this period, in many cities, especially in Istanbul, he opened up landfills, coastlines, riverbeds, agricultural land and military zones—which had previously been prohibited for construction—for development through TOKİ and started intensive construction activities in these areas.

Most of the skyscrapers built in earthquake-prone Istanbul during the AKP period were built during Murat Kurum's term as general manager of Emlak Konut GYO A.Ş. That someone responsible for these skyscrapers and “vertical architecture” is now defending low-rise “horizontal architecture” can only be explained by the new political role given to him.

In addition, Kurum, as a minister, continued a zoning amnesty, which entered into force on June 6, 2018 with the signature of President Recep Tayyip Erdoğan. Many of the buildings that collapsed in the February 6 earthquakes and caused the deaths of thousands of people benefited from this amnesty.

Earthquake damage in Hatay, Turkey, December 2023/January 2024

The “urban transformation” carried out for four years by Ekrem İmamoğlu, the current mayor of Istanbul and the candidate of the CHP, was presented as a remedy against earthquakes. But it transformed very few buildings, like the AKP-led city administration before it, and also served to remove working class residents from the city centre and the building of luxury residences for the wealthy making huge profits in the process.

İmamoğlu's mayoralty was a period in which only land studies, building scans and statistical studies were carried out regarding earthquakes, and actual transformation was almost never carried out. While the municipality has a construction company named KİPTAŞ that can build secure houses with affordable prices, it refuses to do this and directs applications for urban transformation to contractors. These contractors, in turn, offer to build houses at inflated prices, which in most cases the applicants cannot afford. İmamoğlu presents this policy as a “public service.”

According to the Istanbul municipality, 800,000 of Istanbul's 1.2 million buildings were built according to pre-2000 construction and earthquake regulations. It is estimated that about 200,000 of these buildings would be severely damaged or demolished in a major quake. These buildings house a total of 1.3 million households and a population of approximately 3 million.

In Turkey, most of the population lives under the constant threat of a destruction from an earthquake, including more than 24 million people in the Marmara region, which includes Istanbul. One year after the disaster of February 2023, nothing concrete has been done to ensure the safety of this huge mass of people.

Earthquake damage in Hatay, Turkey, December 2023 January 2024

The obstacles are not natural but social. A catastrophe in the Marmara region, like the Maraş earthquake, will ultimately be a disaster caused by the capitalist system, defended by the political establishment including the pseudo-left groups lined up behind the CHP in the 2019 local elections and 2023 presidential elections.

World Bank Robert S. McNamara (RSM) Fellowship 2024/2025

Application Deadline: 28th February 2024

Eligible Countries: World Bank Member Countries

To be taken at (country): Fellows will be hosted at the World Bank in Washington, D.C.

Eligible Subject Areas: Economics, health, education, agriculture, environment, natural resource management, or other development related subject.

About Scholarship: The World Bank Robert S. McNamara Fellowships Program (RSMFP) matches aspiring development economics researchers from developing countries with World Bank research economists creating unique opportunities for the fellows to participate in rigorous policy-relevant research in the World Bank’s Development Economics Vice Presidency (DEC). Fellows will be hosted at the World Bank in Washington, D.C. for 8 months (September to May each year) and work under the supervision of researchers in the World Bank’s Development Impact Evaluation (DIME) and Development Research Group departments, engaging in high-quality and policy-relevant research projects..

By working with World Bank DEC researchers and their external academic collaborators from top universities, fellows will learn current research standards, acquire new econometric skills, and network with leading researchers in their field. They will have a unique opportunity to participate in rigorous policy-relevant research and widen their perspective on potential development questions, and how their research can address challenges in the developing world.

Type: Fellowship

Who is qualified to apply for World Bank Robert S. McNamara Fellowship? To be considered for the RSMFP, applicants must be:

1. Nationals of World Bank WBG member countries, with preference to nationals of developing countries;
2. Graduates of MA level studies or currently pursuing a PhD in Economics or a related field;
3. No more than 35 years of age (by June 30th of the year the fellowship starts);
4. Available to relocate to Washington, D.C. for the duration of the fellowship.

Research programs

Applicants will have the option to select in the application whether they would like to be hosted by the Development research department or the Impact evaluation department in the World Bank’s Development Economics Vice Presidency (DEC).

Selection Criteria: The RSMFP uses the following process to review completed applications, with the aim to identify eligible candidates with the most innovative and relevant research proposals in the area of development.

Two qualified reviewers independently review each eligible application to assess the following:

• Quality of the proposed fellowship (70%)
• Prospects for a productive career in research post-PhD (30%)

Selection Process: All criteria are strictly adhered to. No exceptions are made. Eligibility criteria WILL NOT change during an open call for applications. However, this information is subject to change between the close of one application process and the opening of the next.

Value of World Bank Robert S. McNamara Award: The RSMFP offers a competitive compensation, totaling $44,888 net of income taxes per fellow for an 8-month fellowship (paid in monthly installments). Since the fellows will be hosted at the World Bank in Washington D.C., the World Bank’s HR Operations unit will assist the selected candidates with their ap­plication for G4 visa.

Note: The fellowship does not cover travel expenses.

Number of Awards: Several

Duration of Award: 8 months

How to Apply: Applications for the RSMFP cohort are open annually from March – April. To be considered, applicants must submit:

• Resume
• Statement of research interests
• Contact details for a letter of recommendation (RSMFP team will contact the academic advisor for the letter)
• Writing sample in English (optional)
• Code samples (optional)

Visit the Fellowship Webpage for Details

Wave of layoffs hits UK workers

Ioan Petrescu

UK department store John Lewis plans to lay off 11,000 of its employees, approximately 14 percent of its 76,000-strong workforce, over the next five years. Sources revealed to the Guardian that the cuts will affect all areas of the business, from the group’s head office to supermarkets and department stores.

This came just days after workers found out that their redundancy packages will be cut in half, going from two weeks of pay per year of service to just one for anyone being made redundant from February 1.

The eastern mall facade of the Central Milton Keynes anchor tenant store John Lewis PLC [Photo by John Chryslar / CC BY 1.0]

In an email to employees, the John Lewis Partnership (JLP) said, “Against all of our competing priorities for investment, it’s fair to say that the high cost of redundancy pay has been one of the things that’s prevented us from moving as quickly as we’ve wanted to transform ourselves for the future and has restricted our ability to invest more in pay.”

The email, which angered its workers, was apparently only intended for “central office people managers” and was sent to the entire workforce by accident, according to a subsequent memo that attempted damage-control.

The payment being cut is part of the “partnership redundancy pay” package, which comes on top of statutory redundancy pay and amounts to one week of pay per year of service for those over 22 years old and 1 and a half weeks of pay per year of service for those over 41.

The announcement prompted furious posts on the group’s internal messaging board with one worker saying, “Another example of major changes being made which will affect partners without a dialogue with partners.”

The JLP purports to have a different business model than traditional corporations, claiming that the workers cooperatively “own” the company and share in its profits. As such they are referred to as “partners” rather than “employees”.

In reality, the “partners” do not own any shares in JLP. The company is controlled by a trust that owns virtually all of them. The board of directors that lead the trust have the power to decide how to dispose of the company’s profits. Employees usually receive an annual bonus, framed as a “dividend” (even though it is subject to regular income tax rather than the much lower dividend tax), akin to performance-related bonuses most companies give out. Despite its pretensions, employees have no say in the running of the business, and, in periods of crisis, are the first to be made to pay, either in the form of worse working conditions or, as is the case now, with job cuts.

The misnamed “partnership” has been in dire straits financially for some time. It posted a loss of £59 million last year, with revenues of £10.5 billion. JLP chair, Dame Sharon White, warned at the beginning of last year that inflation had hit the business “like a hurricane” and that workers will likely be made to pay for it through job cuts. The cuts seem like they will be going ahead, despite the fact that JLP has already raised about £260 million by taking on new debt and by selling and leasing back 11 Waitrose grocery stores.

Compounding the layoffs and the cut in redundancy pay, the company also warned staff at the beginning of the month that they should expect smaller pay raises this year to save more costs related to staff. Additionally, management would have more leeway to decide which (and if) employees receive performance-related bonuses. White has said that, going forward, only those who “consistently make an exceptional contribution to the business” will receive the bonuses.

Further changes are reportedly planned to JLP’s constitution that would enable the company to exploit its workers more savagely in the name of “flexibility” and “sustainability.”

The latest cuts at John Lewis are part of a broader wave of layoffs and attacks on working conditions, both in the UK and around the world.

The UK’s largest commercial news publisher Reach announced 800 redundancies late last year, 320 of whom are in editorial teams, citing “challenges facing our industry”. Reach owns The Mirror, Daily Star, Daily Record, Manchester Evening News, Irish Daily Mirror, and Liverpool Echo, among others.

Sky announced last week that it is going to cut approximately 1,000 jobs across its business in Britain this year. This amounts to about 4 percent of the company’s 27,000 employees. The cuts are part of a restructuring effort that will see the broadcaster focus more on digital streaming over the Internet rather than satellite and will impact workers in the more “traditional” part of its business, such as the engineers who install satellite dishes to the sides of homes. Sky was acquired by US giant media conglomerate Comcast in 2018 for £32 billion.

Channel 4 TV also announced it would make redundant 200 roles, or about 15 percent of its total workforce of 1,200. The restructuring will predominately impact staff working in London, as the broadcast plans to sell its expensive headquarters in the capital and relocate. The cuts form part of a five-year strategy that aims to shift Channel 4 away from a dependency on traditional TV advertising to digital income streams.

Telecommunications company BT has already committed to shedding 55,000 jobs by 2030. It is planning to replace a fifth of that by introducing AI across the business, while another large chunk of layoffs will focus on engineers currently rolling out fibre broadband across the UK. US broadcaster Paramount, which owns Channel 5 in the UK, has announced an unspecified number of job cuts.

Layoffs extend across the banking sector.

Lloyds Banking Group is planning to cut 1,600 staff from its branch network as it tries to reduce costs and push customers towards digital services as part of a “corporate overhaul”. The cuts will primarily target staff working in 114 physical locations that will be closed off this year as part of the restructuring. The bank had already announced the slashing of a separate 3,000 roles back in November.

Barclays already cut around 5,000 of its workforce last year as part of a £1 billion cost-cutting drive. The cuts have been mostly focused on the legal, HR and compliance departments and amount to 6 percent of Barclays’ global workforce of 84,000. Around a quarter of the reductions will take place in the UK.

As previously reported on the WSWS, Tata Steel is laying off thousands of jobs at its operations in the UK.

As the crisis of capitalism intensifies, the ruling class everywhere attempts to make the working class pay for it through the destruction of its jobs and livelihoods. The past year has seen a jobs massacre in the tech sector. Last week, multinational shipping giant UPS announced the destruction of 12,000 jobs.

English local councils face £4 billion funding gap, bankruptcy and maximum council tax hike

Paul Bond

Local councils in England will ramp up council tax, slash services already pared to the bone and sell off assets to balance the books after years of austerity measures.

A government committee last week called for an urgent £4 billion cash injection to stave off an “out of control” financial crisis, while ministers are encouraging the sale of council assets to meet shortfalls.

Birmingham City Council House [Photo: G-Man]

Last week, the Conservative government made an emergency announcement of an additional £600 million in council funding, much of it for social care, way below what was required.

The cross-party parliamentary committee on levelling up, housing and communities called for the cash injection, warning that more councils might issue section 114 notices, effectively declaring bankruptcy. Eight councils have issued these notices since 2018, four of them in the last year.

The committee has called for an urgent review by the next government of council service provision and funding, including overhauling council tax. Its chair, Labour MP Clive Betts, warned that without a massive financial settlement “to help bridge the £4 billion funding gap for 2024-25” then “well-run councils” could face “the very real prospect” of bankruptcy.

Local Government Association (LGA) estimates suggest increases of £2.4 billion in 2023-24 and £1.6 billion for the following year will be required. Even this would only maintain services at their current depleted levels.

Institute for Government figures show that even with the £600 million, the core money available to councils will still be 10 percent lower than in 2010-11. Some lower-tier councils have seen their core spending power cut by around half.

The increase in section 114 notices is only the most obvious symptom of the crisis facing local councils. Ministers have tried to present these councils as incompetent, but whether true or not, councils of all political stripes have engaged in catastrophic business and property speculation in response to swingeing austerity cuts that have worsened an existing situation.

The committee’s report cites three areas of particular pressure on councils.

Adults’ and children’s social care takes up 70 percent of top-tier council spending. With funding slashed, councils have closed or shrunk non-statutory services to try and maintain essential services, turning to a rapacious private sector to do so.

Council spending on independent children’s care in England more than doubled in the six years to 2023. In 2021-22, spending on independently run residential care for vulnerable children rose 11 percent on the previous year. In 2022, the 20 biggest independent providers of children’s care charged £1.63 billion in fees, £310 million of which (19 percent) was recorded as profit. Half of those providers had private equity or sovereign wealth fund ownership.

The committee noted a £3.6 billion deficit caused by a widening gulf between funding and the need for Special Educational Needs and Disabilities plans. Ministers have allowed an “override” agreement for it to continue off the books, but it is due for repayment by March 2026.

The third pressure point is the freeze in housing allowances that has led to a rise in homelessness, leaving councils struggling to find temporary accommodation for evicted families. Homelessness has more than doubled year on year in some areas.

The Guardian last year reported that 10 councils devoted more than 10 percent of their core spending to temporary accommodation in 2022-23. The costs are accelerating at a staggering rate. Basildon’s temporary accommodation spending rose from £7,000 in 2017 to £2 million in 2022. Hastings spent £750,000 in 2019 but anticipates an annual bill of £5.6 million by April 2024.

The impact will bankrupt councils and have a disastrous social effect. Hannah Dalton, a councillor who stands as an Independent, and representative of the District Councils’ Network said, “The decline of the safety net which district councils provide will hit the most vulnerable members of our communities hardest.”

Even maintaining reduced necessary spending has meant slashing other provision. Spending on sports development and community recreation has been cut by 59 percent per person, and on parks and open spaces by a third. Library spending has halved since 2010. Spending on community centres and public halls has been cut by around 40 percent.

Pest control budgets are down by two-thirds, replaced by private provision. Highways and transport spending is down 50 percent in more than half of all areas. Waste budgets are down 11 percent, street cleaning by more than 20 percent. There have been cuts to spending on housing services in 84 percent of English council areas.

Even Conservative-run councils have called for rent controls and increased housing benefit rates to offset their impending crisis.

Last week’s £600 million top-up to December’s funding package followed a threatened revolt by 40 Tory MPs, warning of the danger of more councils going bust. The MPs’ letter warned of the “double whammy” of cuts to services and higher council tax rates.

The government’s December £64 billion funding package was up just 6.5 percent on the previous year. Local government representatives warned this would not prevent more councils from going bust. The additional sum barely enables councils to stand still.

The preposterously titled Levelling Up Secretary Michael Gove told parliament the new funding would mean an increase in “core spending power of up to £4.5 billion next year, or 7.5 percent in cash terms.” But almost half of this figure is calculated against every local authority applying the maximum allowable council tax rise, of 4.99 percent. Without that rise, the package would be around 4 percent in cash terms, roughly matching current inflation.

Councils that have issued section 114 notices can apply for higher council tax rises. 

Poorer workers will be hit disproportionately by the property-based tax. The Economist reported that Buckingham Palace pays £1,828 in council tax annually, less than that paid for a three-bedroom semi-detached house in Blackpool. 

Gove’s department is considering plans to encourage councils to sell buildings and other assets worth up to £23 billion to meet budget shortfalls. Under the plans, sales to meet budget shortfalls could be conducted without government approval. Rob Whiteman of the Chartered Institute of Public Finance and Accounting called it “a sort of directive to break the rules—an allowance given to break all known usual accounting convention.” Encouragement of such racketeering is another step towards the wholesale dismantling of social provision for profit.

The relaxation would push towards a fire sale of buildings intended for social provision. Councils including Leeds, Kent, Somerset and Woking have already earmarked libraries, civic halls, swimming pools and community centres for sale.

The plans encourage the speculation which has exacerbated the wider crisis. Selling to offset shortfalls is also finite. The Institute for Public Policy Research last year reported that 75,000 public council assets, worth around £15 billion, have already been sold since 2010.

Pete Marland, Labour chair of the LGA’s resources board, has said that “any incoming government” needs to address the amount of available funding, as well as the entire funding system itself. But any claim that a Labour government might resolve this crisis is a lie.

Labour has committed itself to taking from workers and public services to pay for the capitalist crisis. Shadow Chancellor Rachel Reeves reassured the Sunday Telegraph that Labour would not have any spending plans requiring raising money through tax rises on the wealthiest. Instead, she urged shadow ministers “to come up with reforms and identify schemes that could be scrapped so that the money can be spent elsewhere,” as “the money is simply not going to be there.”