Israel’s war budget points to a deepening economic, social and military crisis

Jean Shaoul

Prime Minister Benjamin Netanyahu’s fascist cabinet has approved a budget for 2025 with some of the biggest spending cuts and tax increases to finance the war that Israel has ever seen.

With the war, already the longest and most expensive Israel has ever fought, now expanding to Lebanon and Iran, the proposed tax hikes and spending cuts will likely deepen before the Knesset approves the budget in three months’ time.

Israeli Prime Minister Benjamin Netanyahu, center, with commanders and soldiers in the northern Gaza Strip, on December 25, 2023. Netanyahu has said Israel will continue with the offensive until a "final victory" achieves all of its goals. [AP Photo/Avi Ohayon/GPO]

According to the Finance Ministry, by the end of last September the direct cost of the war had reached $29 billion. Since then, it has soared with the assault on Lebanon, the heavier fighting in Gaza and the strikes on Iran. Tens of thousands of reservists have been called up and ammunition is being used up at an immense rate. The daily costs have risen from $110 million to $135 million, a sum that would build a dozen much needed schools.

The ratings agencies have downgraded Israel’s credit rating, while foreign investors have reduced their exposure to Israeli debt. The economy, which has still not recovered from the collapse suffered during the first months of the war, when some 350,000 reservists were called up, is now smaller than it was on October 7, 2023. Israel’s much vaunted high-tech sector is struggling. Intel Israel is to lay off hundreds of workers. Investment in plant and equipment is down. The travel and tourism industry is at a standstill as flights are cancelled due to the war.

Last month, following Iran’s missile attack, Chevron, which operates Israel’s Leviathan gas field, announced it was suspending work on a $429 million expansion project due to the “security situation.” Further Israeli attacks on Iran, particularly its oil facilities, could trigger a far wider war, creating a global oil shortage and raising the cost of imported petroleum with ripple effects throughout the economy.

The 2025 state budget at $163 billion is about $4.8 billion more than this year and includes a massive $27.2 billion increase for the military that could rise to $40.1 billion. It follows the 2024 budget that, despite the war, contained no tax increases or significant spending cuts, ran up a big budget deficit and postponed the bill till later.

Finance Minister and Religious Zionist leader Bezalel Smotrich is proposing steep spending cuts as well as tax increases to finance the war—currently estimated to cost $66.8 billion by the end of this year—and plug a $10.7 billion deficit in 2025. Nevertheless, the budget deficit will reach 4.4 percent of GDP, higher than the planned 2.25 percent due to the rising cost of the war.

The measures to be borne by the working class include a freeze on public sector wages and welfare benefits for the elderly, people with disabilities and Holocaust survivors. Even wounded soldiers and the families of fallen soldiers will not be spared. As consumer prices rise by nearly 4 percent a year, Israelis will pay more taxes—VAT is set to rise and workers in the lowest income tax band will see their tax rate rise from 10 percent to 14 percent —while the value of welfare benefits will fall in real terms.

With Israel one of the most unequal countries in the OECD group of advanced countries, the budget will have a devastating impact. According to the National Insurance Institute, even before the war poverty had risen with 1.98 million Israelis (around 21 percent of the population) in poverty in 2022, of whom 949,000 were working. This particularly affects children, of whom almost one in every three lives in poverty. Food prices have risen, with vegetable prices jumping by 18 percent and fruit prices by 12 percent, due to agricultural shortages, making it especially hard for those struggling with food insecurity.

Every ministry except defence will see its funding cut, with education and public transport taking the biggest hits. But Smotrich is also taking $73 million from the health budget and $26.7 million from the welfare budget and closing five ministries he considers superfluous.

Arnon Bar-David, the leader of the Histadrut, after spending hours talking to the Ministry of Finance and Smotrich, said that the corporatist trade union federation would support the proposed budget—having secured two days additional paid leave in return for a freeze on public sector wages.

The austerity budget follows the ever-rising cost of the now 13-month-long war in Gaza, near daily mass raiding operations in the West Bank, escalating fighting in Lebanon and the strikes on Iran, with no end in sight. The Israel Defence Forces (IDF), having mounted a ground invasion of Lebanon with the aim of pushing Hezbollah back to the Litani river, has been unable to hold ground more than two kilometres from the border and had to stage frequent retreats when casualties became too high.

Netanyahu has insisted he will defy global pressure and continue pursuing Israel’s war goals—“total victory” against Hamas and the degradation and defeat of Hezbollah—while warning Iran that “there is no place” in the Middle East that “the long arm of Israel cannot reach.”

According to reports from a committee examining future defence needs, the military will need nearly $100 billion extra over the next decade, meaning higher taxes to finance it and more regular and reserve army service, reducing economic output. This is for a country that even in 2022 had the world’s 15th-largest military budget, far higher than countries with a much larger population and economy.

The army is desperately short of manpower. According to a recent study by the Institute for National Security Studies, the IDF will need about 20,000 combat soldiers and other personnel. This is fueling the furious debate that threatens Netanyahu’s coalition over ending the exemption of ultra-orthodox Jews (known as Haredim) from compulsory military service if they are studying in religious seminaries (yeshivas).

Last June, the High Court ordered an end to the Haredi exemption by November this year, with Attorney General Gali Baharav-Miara later ruling that draft evaders would not be entitled to government allowances and day-care subsidies. This would be a serious blow to the ultra-Orthodox, who do not work and rely on the allowances negotiated by the ultra-religious parties as the price for keeping Netanyahu in power. The IDF has done little to respond to the Court’s ruling and to recruit the ultra-orthodox, thereby allowing the Haredim to avoid conscription without losing their allowances.

But in a war that has cost the lives of at least 772 soldiers and security personnel, injured at least 12,000 more—figures opposition leader Yair Lapid said were a vast underestimate—and forced tens of thousands to do months of reserve duty, this has provoked fury and disgust among secular Israelis already alienated by the dominance of the religious authorities over everyday life.

Now the religious parties have put forward a bill that has government support to subsidize day care for children of full-time yeshiva students who dodge the draft at a cost of $54 million and made approval of the law the condition for their support for the 2025 budget.

Other divisions are opening up. According to Haaretz military correspondent Amos Harel, Israel’s defence establishment believes that the war in Lebanon and Gaza has exhausted the troops and risks heavy losses if the IDF is required to remain there. The military would prefer a deal to secure a ceasefire and the release of all hostages still held in Gaza.

While the majority of Jewish Israelis support the defeat of Hamas, the toll of the war—for both Israelis and Palestinians—is driving some Jewish Israelis to leave the country. Of those who left in October 2023, 12,000 had not returned by last June, according to official statistics. One in four Jewish Israelis and four in 10 Arab Israelis say they would emigrate if given the opportunity, according to a survey by the Jewish People Policy Institute. Its president, Professor Yedidia Stern, said, “The findings indicate a deep crisis of trust between the public and the security and political leadership. This is a significant challenge at any time, but particularly crucial during a crisis.”

Middle East Eye cited a report showing that an increasing number of Israeli soldiers are becoming disillusioned with the fighting, with some refusing to return to the battlefield. One soldier told HaMakom that missions were being “done halfway” due to the lack of manpower. “The platoons are empty; those who aren’t dead or physically wounded are mentally broken. Very few come back to fight, and even they aren’t fully okay,” the soldier said.

Last month, 130 Israeli soldiers and reservists signed an open letter addressed to Netanyahu conditioning their continued service on the signing of a deal for the release of hostages and an end to the war, the first mass wave of Israeli soldiers refusing service in protest of war and occupation in recent years.

Trudeau slashes immigration as part of a lurch still further right

Keith Jones

The Justin Trudeau-led Liberal government is dramatically reducing both the number of new permanent residents Canada will accept over the next three years and the number of people allowed to temporarily reside in the country.

Amid a mounting wave of worker struggles, the right and far-right have been agitating for the federal government to slash the number of new entrants to the country on the grounds that “excessive immigration” is responsible for soaring housing costs and homelessness and the breakdown of public services.

The Liberal government’s embrace of this filthy Canadian nationalist argument goes hand-in-hand with its waging of aggressive war in alliance with the United States around the world, which requires the subordination of society’s resources to military spending and the whipping up of a fake “national unity” against external enemies. Workers across Canada must repudiate the pervasive anti-immigrant agitation now being mounted by the entire ruling class.

At an October 24 press conference, Trudeau and Immigration Minister Marc Miller announced changes to Canada’s immigration targets and policies whose net outcome will be the first ever decline in Canada’s population.

Canada's Prime Minister Justin Trudeau arrives for the 19th Francophonie Summit, at the Elysee Palace, in Paris, Friday, October 4, 2024. [AP Photo/Louise Delmotte]

The number of persons admitted as permanent residents—the immigration category that provides a path to citizenship—is to be cut 21 percent next year and by 27 percent by 2027, falling from half-a-million this year to 395,000 in 2025, 380,000 in 2026 and 365,000 in 2027.

The government’s curtailing of so-called temporary migration is even more drastic. Thanks to the regressive changes it has made to the “temporary foreign worker” and “international student” programs over the past year and the erection of new barriers to those seeking refugee status, the government aims to slash the total number of people temporarily residing in Canada by 900,000 by the end of 2026 or more than a quarter.

As a result of these changes, said Miller, Canada’s population will fall by 0.2 percent by the end of 2026, and the government projects 670,000 fewer new homes will be built over the next three years.

At their joint press conference, Trudeau and Miller tried to distance themselves from the most virulent far-right anti-immigrant rhetoric, claiming their aim was not to bar immigration but ensure continued “support” for it.

However, this was only a matter of degree. They promoted the lie that immigration is responsible for much of the social crisis roiling the country. Immigration, declared Trudeau, “must be controlled, and it must be sustainable.” Miller said it was “undeniable” that the volume of migration has “contributed” to the “affordability” crisis.

Trudeau—whose government has presided over the worst inflation in decades, imposed high interest rates and used a battery of legal mechanisms to strip workers of their legal right to strike—sought to dress-up his efforts to deflect social anger onto immigrants and migrant workers in phony anti-big business rhetoric. “Businesses,” he proclaimed, “should no longer rely on cheap foreign labour.”

In reality, it is workers who will bear the full brunt of the government’s slashing of immigration levels. Business organizations already report that large numbers of Temporary Foreign Workers are being expelled from the country as the government refuses to extend or renew their work permits. The Bank of Canada and numerous economists are forecasting the dramatic cuts to new permanent and temporary residents will be a major drag on the economy and may help push it into a recession.

The most reactionary forces were quick to celebrate and claim credit for Trudeau’s “U-turn.” However, the far-right Conservative Party leader, Pierre Poilievre, Quebec Premier and CAQ leader François Legault and Parti Québécois leader Paul St. Pierre-Plamondon, the latter two who are competing as to who can make the most inflammatory Quebec chauvinist appeals, complained that the cuts in new residents didn’t go far enough.

For its part, the rabidly right-wing Toronto Sun crowed that the Liberals have legitimized their foul anti-immigrant appeals. “We aren’t going to fault Prime Minister Justin Trudeau for admitting his high immigration policies were a mistake that contributed to today’s affordability crisis,” affirmed a Sun editorial, “We do fault him for his government’s false depiction of Canadians who were raising these concerns long before he did, as racists.”

The billionaire would-be dictator and Republican nominee in the Nov. 5 US presidential election Donald Trump also welcomed Trudeau’s announcement, writing in a social media post, “even Justin Trudeau wants to close Canada’s borders.” Trump has placed at the centre of his campaign anti-immigrant incitement, calling for the establishment of internment camps and the deportation of ten million “illegal” migrants.

Anti-immigrant agitation: a spearhead of social reaction  

Workers must beware. In Canada, as in the US and Europe the scapegoating of immigrants is being used to push politics far to the right, cultivate fascist forces and split the working class. Fascist forces like Marine Le Pen’s Rassemblement National in France, the AfD in Germany, and Italian Prime Minister Giorgia Meloni and her Brothers of Italy party are spearheading the anti-immigrant and anti-refugee incitement. But everywhere, it is being embraced by the ruling class and its traditional parties of government as a means of scapegoating the most vulnerable sections of the working class for the social dislocation and misery caused by the capitalist profit system. Anti-immigrant/anti-refugee agitation also serves to justify the strengthening of the state’s repressive apparatus, the militarization of borders, and the whipping up of a strident bellicose nationalism.

Canada is a rich, advanced capitalist country with abundant land and resources. If public services are collapsing and there is a shortage of affordable housing, even in the midst of great wealth and a technological revolution, this is the outcome of a one-sided class war. For decades, the political representatives of the capitalist ruling elite have imposed austerity, eviscerated social housing, slashed taxes on big business and the rich and otherwise gutted all constraints on capitalist exploitation to redistribute wealth upwards. This process has been accelerated in recent years by the massive state bailouts of the financial elite, the ruinous profits-before-lives response to the COVID-19 pandemic, and the diversion of ever greater resources to preparation for and the waging of war.

In so far as there is a global “migration crisis,” it is directly attributable to the predatory actions of US and Canadian imperialism and their European allies—to the social devastation wrought by decades of US-instigated wars, IMF-dictated capitalist “structural adjustment” programs and capitalist-induced climate change.

Demonstration against the reactionary Canada-US Safe Third Country Agreement, which has forced those seeking sanctuary from Trump and Biden’s mass deportations to enter Canada irregularly. [Photo: David Asper, Centre for Constitutional Rights]

Trudeau has long claimed to be a champion of refugees and an “open, diverse” Canada. His call for a hike in Canada’s intake of Syrian refugees at a time when Stephen Harper and his Conservative government were promising to establish a “snitch line” for Canadians to denounce immigrants’ “barbaric practices” played a role in the Liberals’ 2015 come from third-place election victory.

However, Trudeau’s pro-immigrant and refugee posturing was always a fraud. Under his government Canada has continued to have one of the world’s most “market”—i.e. big business—driven immigration policies in the world. The government, especially after the near-total freeze on new entrants to Canada during the first two years of the pandemic, did increase the number of new permanent residents. But far and away the bigger increase over the last two years and throughout the Liberals’ nine years in office was in the in-take of temporary workers, who are denied basic rights and whose right to remain in the country is tied to a single employer. As the result of a comprehensive investigation, the UN Special Rapporteur on Slavery recently condemned Canada’s Temporary Foreign Worker program as akin to modern slavery.

That said, the Trudeau government’s raft of measures to limit the intake of new permanent residents and expel temporary residents en masse is part of an ever-widening and accelerating lurch to the right. It is giving unstinting support to the NATO-instigated war against Russia, and to Israel’s genocidal assault against the Palestinians and rampage across the Middle East. It has pledged to double Canada’s military budget to $82 billion per year by 2032 and is systematically gutting workers’ right to strike.

In pursing imperialist war abroad and class war at home, the Trudeau government has been able to rely on the political support accorded it by the trade union bureaucracy and the trade union-sponsored NDP. The NDP formally ended the confidence-and-supply agreement under which it had been propping up the Liberal government for two-and-a-half years in September. But it and the unions continue to promote the Liberals as a “progressive” ally in countering Poilievre and his Conservatives, while working to systematically isolate and suppress the mounting wave of workers’ struggles and the opposition to the imperialist-backed genocide.

Trump and the Trudeau government

Asked by the CBC what he thought of Trump’s social media post welcoming the change in Canada’s immigration policy, Immigration Minister Miller reprised the government’s oft-stated position that Ottawa will not comment on the US election campaign and that Canada “will be able to work with” whomever is the next president.

To be sure, the Trudeau government and the Canadian ruling class as a whole would much prefer that the Democrat Kamala Harris succeed Joe Biden. But this is only because they view Trump as untrustworthy in wisely pursuing the common predatory interests of North America’s imperialist powers and fear his explicit plans for the establishment of a fascist dictatorship will incite mass social unrest and class struggle on both sides of the border. However, Ottawa’s response to Trump’s 2020-21 coup plot, which was to remain silent until it was clear that Biden would take power, underscores that they will place an alliance with a dictator Trump before any principled defence of democratic rights.

Over the past year, the corporate media has been full of commentary that the best way to “insulate” Canadian imperialism from a second Trump presidency is to make Canada “indispensable” to Washington, by massively expanding Canada-US military-security cooperation around the world and by ensuring Canada is a linchpin in the US transition to a “war economy.” Such cooperation, as Miller’s comments indicate, would also mean assisting Trump, were he to secure the White House, in his plans to unleash state violence and expel ten million immigrants.

Pacific leaders’ fact-finding mission in New Caledonia

John Braddock

Following repeated delays, the Pacific Islands Forum (PIF) last week sent a “strictly observational” mission to New Caledonia to meet with local government, business, political and “community” leaders. The three-day visit was ostensibly to gather information “from all sides” about the ongoing social and political turmoil in the French colony.

Pacific Islands Forum “troika plus” leaders meet in New Caledonia [Photo: X/Pacific Islands Forum]

The “troika plus” mission was led by Forum Chair Hu’akavameiliku Siaosi Sovaleni, the Prime Minister of Tonga, joined by Cook Islands Prime Minister Mark Brown, Fiji Prime Minister Sitiveni Rabuka, Solomon Islands Minister for Foreign Affairs Peter-Shanel Agovaka and supported by PIF Secretary General Baron Waqa.

New Caledonia’s pro-independence President Louis Mapou had requested the mission in response to France’s police-military crackdown on unrest that began in May. Mapou emphasised the group was not there to “interfere,” but because “a member of their [the PIF] family is in difficulty” and “to contribute to the de-escalation of conflict.”

Widespread rioting, mainly by alienated indigenous Kanka youth, has so far resulted in 13 deaths—most of them caused by police violence—and an estimated €2.2 billion in damage, full or partial destruction of some 800 businesses, and nearly 20,000 job losses. The economy has virtually collapsed.

Some 7,000 French security personnel with armoured vehicles remain deployed to impose “republican order” in the territory by quelling unrest. Oppressive measures such as nightly curfews remain in place.

In July France’s ambassador to the Pacific, Véronique Roger-Lacan, rejected as “impossible” suggestions that the PIF, the Pacific’s principal leadership body, could “mediate” between French authorities and pro-independence parties, because New Caledonia remains part of France.

The ongoing crisis was a key agenda item at the PIF summit in Tonga in August. According to then PIF chair Brown, the mission was required to “try to reduce the incidence of violence” and to appeal for talks between the different sides. Mapou emphasised that the unfolding events were “hard, of an extreme gravity and in a certain way are contributing to the region’s instability.”

The mission went ahead with the permission of French President Emmanuel Macron, who assented on August 10. But it was repeatedly postponed due to “differences” between France and New Caledonia’s local government over its status. The then pro-independence Congress President Roch Wamytan accused France of dictating the purpose of the mission, describing it as “an unacceptable form of humiliation.”

The PIF has not yet released an official statement on the mission. Islands Business journalist Nic Maclellan told RNZ Pacific that a main feature of discussions, held with “a diverse range of people,” was the economic crisis. There is, he reported, “great anxiety” about what economic support France will provide as the government imposes austerity measures in mainland France. New Caledonia’s Congress has put forward a recovery proposal of more than €4 billion over the next five years.

According to Maclellan, during the discussion with the Kanak Customary Senate there was much talk “about [Pacific] family.” PIF leader Hu’akavameiliku was, however, evasive about the issue of independence, telling the media: “There are various models in the Pacific. …We are not the ones who will tell [New Caledonia] what is working and what is not. We respect their sovereignty.”

Tuvalu MP Simon Kofe declared: “My position is for independence, we need to continue to support the decolonisation of the Pacific.” Fiji’s Rabuka cautioned the pro-independence parties to be “very, very reasonable” in their requests to Paris. He told RNZ Pacific that he had said to the Kanak movement: “Look, don’t slap the hand that has fed you. So have a good disassociation arrangement when you become independent, make sure you part as friends.”

In fact, a deepening social crisis is at the heart of the uprising. A leader from the Protestant Church of Kanaky New Caledonia, Billy Wetewea, said that the indigenous population is battling inequities in education, employment and health. “The destruction that the youth have made since May, was a kind of expression of the frustration towards all of these social injustices,” he explained.

The Pacific governments, led by Australia and New Zealand, are not concerned about the brutal conditions imposed on New Caledonia’s oppressed masses by its French colonial overlord. They are nervous that if France cannot bring the situation under control, the unrest in New Caledonia, following riots in Papua New Guinea in January, could spark similar rebellions across the impoverished region, where living standards are being ground down by inflation.

In preparation for looming interventions, Pacific leaders have backed a sweeping Pacific Policing Initiative, under pressure from Australia, despite concerns that it will escalate the confrontation with China in the region. Multi-country police units, with up to 200 officers, trained and led by the Australian Federal Police, are being established. The first saw its initial 40-strong deployment at last month’s CHOGM summit in Samoa.

Speaking to the Australian Broadcasting Corporation (ABC), Rabuka—a former Fiji military coup leader—said the Pacific Policing Support Group could be deployed to New Caledonia as a “peacekeeping force,” modelled on Australia’s Regional Assistance Mission to the Solomon Islands (RAMSI). From 2003–2017, Canberra imposed a neo-colonial occupation in Honiara, taking control of key aspects of the impoverished country’s administration, including police, legal system, prisons and finance ministry.

Roger-Lacan told the ABC she doubted French authorities would see the need for Pacific police to be deployed to New Caledonia. “Security is the exclusive competence of the French State,” she said, claiming: “Stability has been brought back by the French state therefore this does not appear to be an issue now.”

In fact, the UN Human Rights Committee last month sharply criticized France over the death toll in New Caledonia and its “cold shower” approach to decolonization. “The means used and the intensity of their response and the gravity of the violence reported, as well as the amount of dead and wounded, are particularly alarming,” Jose Santo Pais, assistant prosecutor general of the Portuguese Constitutional Court said on the committee’s behalf.

French delegates at the Geneva hearing flatly defended the country’s actions and rejected the jurisdiction of the UN decolonization process, saying Paris “no longer has any international obligations” since three referenda on independence had seen majority votes to remain with France. The final plebiscite in December 2021 was boycotted by the independence movement.

French Prime Minister Michel Barnier last month abandoned the contentious constitutional voting reform which triggered the colony’s violent unrest in May. Paris’s decision was intended to buy time to engage the factions of the territory’s political establishment, including the pro-independence parties, to negotiate a way to still meet the requirements of French imperialism.

The permission given for the PIF mission was bound up with this agenda. It was preceded a week earlier by a visit to Nouméa by French Overseas Minister François-Noël Buffet for discussions with New Caledonia’s “key players.” At the end of his visit Buffet announced: “The time has come to return to dialogue, discussion, exchange, after the terrible (events) New Caledonia has been through.”

One pro-independence Union Calédonienne leader, Pierre-Chanel Tutugoro, said the talks with the minister, in an “open-minded” atmosphere, seemed to confirm that there was a “decolonisation process” underway. “So, on that basis, this is what we’re aiming for, what we’ll put on the table: full independence with or without partnership with France,” he told reporters. “All the options will be on the table.”

Another French mediation and “concertation” delegation, headed by the Presidents of both French Houses of Parliament, Gérard Larcher (Senate) and Yaël Braun-Pivet (National Assembly) is due in Nouméa this month. Macron is likely to summon New Caledonia’s political leaders to Paris before the end of this year.

Any deals reached by the political elites in Paris and Nouméa will do nothing to resolve the fundamental issues behind the unrest—poverty, social inequality, unemployment and social desperation. The rebellion has brought a substantial section of Kanak youth into conflict, not only with French colonial oppression, but with the territory’s establishment, which includes the local government and the official pro-independence movement.

Moreover, the bourgeois program of national “independence” is a political dead-end, especially amid the escalating US-led drive to war in the Pacific and global capitalist austerity measures. None of the fragile, impoverished Pacific countries is fully independent, nor can they be. All rely heavily on aid from the imperialist powers and are subject to routine interference from Australia, New Zealand, the US and France.

Oxfam report: “Inequality is at an all-time high – and rising.”

Harvey Simpkins

On October 21, Oxfam and Development Finance International (DFI) issued a joint report, “The Commitment to Reducing Inequality Index,” detailing record inequality and increasing austerity measures around the world. All told, 90 percent of the 164 countries examined were implementing policies “that are highly likely to increase economic inequality.”

Residents of the township of Soweto, Johannesburg, South Africa, queue for water. [AP Photo/Jerome Delay]

The report examined three “pillars” to assess the level of inequality within the 164 nations: public services spending (on education, health and social protection); progressive taxation; and labor rights and wages. Since the last report in 2022, 84 percent of the countries have cut spending on education, health and/or social protection. Tax policies have regressed in 81 percent of countries, and “Labour rights, minimum wages, vulnerable employment and/or labour income inequality have worsened in 90 percent of countries.”

Oxfam and DFI began issuing these reports in 2017. The 2024 report represents the first time that the majority of countries were shown to be regressing in all three areas. The report notes that due to this worldwide decline in social policy, “inequality is at an all-time high – and rising.”

Of the 164 countries examined, 112 fell below the minimum recommendation to spend 15-20 percent of the national budget on education. Since 2022, average education spending has declined from 14 percent to 13.7 percent.

Health spending has stagnated at 11 percent since the 2022 report, with spending not rebounding to pre-pandemic levels in the poorest countries. The 2022 report found that half of low- and lower middle-income countries cut health spending during the first two years of the pandemic. Social protection spending also stagnated at 18.3 percent between 2022 and 2024.

The International Monetary Fund (IMF) and World Bank, two pillars of the global capitalist system, have played an especially pernicious role in social spending cuts and growing inequality over the last two years. Since 2022, 94 percent of countries operating under World Bank programs and 95 percent with IMF loans cut budgets for education, health, and/or social protection.

The report noted that “The IMF continues to contribute actively to an increase in austerity measures worldwide, as seen especially in spending cuts being recommended in the vast majority of countries to reduce post-pandemic debt and deficit levels.” As an April 2023 Oxfam report noted:

“Austerity kills. It stunts lives and it destroys potential. It cripples economies, setting societies’ progress back many years. It drives up inequality and poverty.”

Eight of the bottom 10 performing countries are in sub-Sahara Africa. All countries in this region have World Bank and IMF programs.

The two countries that have seen the largest decline in public services spending since 2022 are Argentina and Ukraine. In Argentina, fascist President Javier Milei has enacted a 76 percent cut in health spending and a 60 percent cut in education, while gutting laws protecting workers. Milei also pushed through retrograde changes to the country’s wealth tax, lowering the tax rates and raising the non-taxable minimum wealth thresholds.

Fascistic president of Argentina, Javier Milei, brandishes a chainsaw during a campaign event in La Plata, Argentina, Tuesday, Sept. 12, 2023 [AP Photo/Natacha Pisarenko]

In Ukraine, 58 percent of government spending is on the military and another 15 percent is dedicated to debt servicing. Since 2022, Ukraine has cut social protection spending the third most of any country in the world.

The report explained that Ukraine “moved from its previous universal system, which has been shown to have a significant impact on both poverty and inequality, to a new means-tested system that has hugely reduced coverage, and is included in the recent loan agreement with the IMF.”

The country also ranks 158th out of 164 countries in tax progressiveness.

Government debt is one of the prime drivers of the assault on social spending. The report explained that this is the “worst global debt crisis ever.” In 2024, debt service, on average, consumes 41.5 percent of government budget revenues, 41.6 percent of spending, and 8.4 percent of gross domestic product. The IMF expects these conditions to persist for another decade.

The average low- and lower middle-income country spends 48 percent of its budget on debt service, exceeding total spending for social needs. In these countries, debt spending is 2.7 times education outlays, 4.2 times health expenditures and 11 times the spending on social protection. IMF forecasts for 2025-2029 predict that 60 percent of these countries will cut budgets by a total of $336 billion.

With a growing number of countries facing large debt burdens, countries are increasingly turning to the IMF for bailouts, which, in turn, leads to further cuts in social spending. A 2023 Oxfam report found that 85 percent of 107 COVID-19 IMF loans either recommended or required countries to undertake austerity measures.

Military spending is another driving force in social spending cuts. Total global military expenditure reached $2.24 trillion in 2022, a 3.7 percent increase in real terms over 2021. In 2023, such expenditures reached $2.443 trillion, a 6.8 percent increase. According to the Stockholm International Peace Research Institute, 2023 saw the steepest annual increase in military spending since 2009 and represented the highest level ever recorded.

B-2 Spirit stealth bomber [Photo: US Air Force/Staff Sgt. Bennie J. Davis III]

On average, military spending accounts for an average of 8 percent of government budgets. In addition to Ukraine, Belarus also spends more than half its budget on the military. Pakistan and Mali spend three times on the military what they do on health.

Despite the report’s damning insights, Oxfam/DFI’s prescriptions offer no way forward. The authors conclude that “Inequality is not inevitable. It is a policy choice. Each country has the potential to reduce inequality.”

They then offer a series of proposals that capitalist governments have no intention of implementing. These include:

“prioritize public spending on essential public services;”

“increase progressive taxation;”

“intervene in the labor market to protect all workers;”

“focus World Bank and IMF efforts on reducing inequality;”

“reach and implement global agreements to tax super-rich individuals and corporations.”

None of these measures will be taken by the capitalist ruling elites. Driven by an economic system that has reached its “death agony,” the return to any form of social welfare policies under capitalism is a utopia.

Social murder in Spain: 217 dead, 1,900 missing in Valencia flood

Alejandro López & Alex Lantier

The catastrophic impact and death toll from last Tuesday’s Valencia floods are an indictment of the social and political order. Valencia is well known to be one of Europe’s most flood-prone areas, and scientists have for years warned Spanish and European authorities of the urgent need to protect its population. Yet masses of people received no warning on Tuesday before walls of water from flash floods broke over their homes and workplaces.

Emergency services remove cars in an area affected by floods in Catarroja, Spain, on Sunday, November 3, 2024. [AP Photo/Manu Fernandez]

Spanish authorities tried to cover up the scope of the catastrophe and refused to publish a death toll, which was unknown until Friday night when notes of a meeting of the Valencia regional authorities were leaked to the press. They revealed that a staggering 1,900 people were missing and nearly 200 people confirmed dead. Since then, the number of confirmed dead has risen to 217 across Spain, including 213 in the Valencia region.

According to photo data from the Copernicus Emergency Management Service, the European Union (EU) space program, the floods hit at least 77,000 buildings, home to 199,000 people. Mud has buried many of the bodies and floodwaters have carried others out to sea. Streets are littered with cars tossed about like matchboxes by the floodwaters. Thousands of people still do not have access to running water, electricity, heating or medicine, and stores and supermarkets across the region are in ruins.

While Prime Minister Pedro Sanchez of the Socialist Party (PSOE)-Sumar government has ordered 10,000 soldiers and military police to the region, rescue operations are still largely being carried out by volunteers. The Spanish Health Ministry has warned that hospitals are “on the verge of collapse,” and by Friday, its emergency hotline had received 75,000 calls. The Mediterranean Corridor routes, on which 40 percent of Spanish goods pass, are closed. The Madrid-Valencia A3 highway is cut, trains in Valencia are stopped, and dozens of roads and bridges are demolished.

Moreover, the storm is still lashing eastern Spain: Murcia, Almeria, Alicante, Castellon, Tarragona, and now southern Valencia again are all on flood alert.

Valencia is the scene of a social crime. Scientists have long warned that human-induced climate change would raise the vulnerability of the Mediterranean region, and of eastern Spain specifically, to catastrophic floods. After Valencia flooded in 2019, the Red Cross issued a report warning of weak infrastructure, building construction taking place in flood-prone areas, and nonexistent disaster planning in Valencia and called for measures to protect its population from future floods. None of these warnings were heeded in official circles.

The PSOE and Compromis, the Valencian allies of the middle-class pseudo-left Podemos and Sumar parties, set up an unfunded Valencian Emergency Union (UVE) shortly before leaving office. Their successor, Valencian Premier Carlos Mazón of the right-wing Popular Party (PP), scrapped the UVE after being elected in 2023. At the same time, Mazón cut inheritance taxes on landowners and handed €90 million in corporate subsidies to Volkswagen.

As the storm approached, Mazón refused to take action, though Spain’s State Meteorological Agency gave warnings five days in advance, correctly predicting flood waters would peak Tuesday. He issued baseless assurances to the public that the rains would diminish over the course of the day. It was not until shortly after 8 p.m. Tuesday that his government issued a text message alert advising residents to stay indoors. But by that time, the region was flooded and hundreds were already dead.

In The Condition of the Working Class in England, Karl Marx’s great co-thinker Friedrich Engels gave a famous definition of social murder. “When society places hundreds of proletarians in such a position that they inevitably meet a too early and an unnatural death,” he wrote, and “yet permits these conditions to remain, its deed is murder just as surely as the deed of the single individual.”

Anger is erupting at the social murderers who run Spanish and European society. Yesterday, Sanchez, Spain’s King Felipe VI and Queen Letizia visited Paiporta, one of Valencia’s worst-hit towns, blocking rescue supplies as police set up a security perimeter around them. Outraged residents surrounded Sanchez and the royal couple, pelting them with mud and chanting: “Get out!”, “Pedro Sanchez, where are you?” and “Murderers!”

Billionaire capitalist aristocrats condemned workers to death, demanding they come to work amid the flood. Spain’s richest man, Amancio Ortega (net worth €127 billion), bars workers at Inditex from having phones at work, and they missed even the hopelessly late official emergency texts. Workers confronted Mercadona supermarkets owner Juan Ruig (€9 billion) for ordering Mercadona trucks out during the storm surge, to which Ruig replied by shouting obscenities.

With global warming, workers and youth face a world crisis that cannot be solved in the rotten framework of the capitalist nation-state system. It is well known that global warming will cause increasingly violent storms around the planet. However, no coordinated action is taken to stop it, or to invest the necessary resources to set up infrastructure and disaster response plans capable of withstanding such emergencies.

Instead, in one country after another, state officials and the ruling class treat working people with malign neglect, leaving them to fend for themselves amid catastrophic storms. In the United States, Hurricane Helene caused severe flooding recently, resulting in over 230 deaths, while continuous rainfall across Central Europe led to flooding and 20 deaths just weeks before the Valencia disaster. Floods in Nigeria, Chad and Ghana have killed over 1,500 people.

The industrial, technological and scientific resources exist to halt global warming and protect humanity from its effects, but they cannot be mobilized for this purpose while they remain under the grip of a ruling class that is unfit to rule.

Where, it must be asked, have the resources gone that could have been used to build flood-resistant infrastructure and save lives in Valencia? Since the 2008 Wall Street crash, the European Central Bank has massively expanded its balance sheet, printing nearly five trillion euros in public money that was handed over in bailouts of the financial and corporate aristocracy. Over the same period, the EU powers collectively spent hundreds of billions of euros on raising their military budgets.

Under PSOE-Podemos and PSOE-Sumar governments, Spain’s military budget hit a record €26 billion. At the same time, Podemos and Sumar ministers oversaw the handing out of EU bailout funds to Spanish corporations, while Madrid continued to trade weapons with Israel amid the Israeli genocide in Gaza.

Their hostility to the working class is epitomized by Labor Minister Yolanda Díaz of Sumar (formerly Podemos), who infamously ordered workers back to work at the height of the COVID-19 pandemic, leading to over 140,000 deaths in Spain and leaving millions with Long Covid. Last week, she cynically called for “responsibility” from corporate management during the flooding, so “no one works while taking risks.”

PepsiCo announces closure of four US plants, eliminating 500 jobs

Brian Green & Kristina Betinis

Pepsi soft drinks in plastic bottles are on sale at a grocery store in New York on November 15, 2023. [AP Photo/Ted Shaffrey]

PepsiCo, the world’s second-largest food and beverage business with a market capitalization of more than $200 billion dollars, announced early Monday morning the layoff of roughly 200 employees and the closing of its only Chicago area plant, effective immediately.

Just three days later, the company announced it was ending production at plants in Cincinnati, Ohio, Harrisburg, Pennsylvania and Atlanta, Georgia at the end of December, taking an additional 300 jobs from those locations and leaving warehouse operations in place. A PepsiCo plant near Carlisle, Pennsylvania will lose transport operations as well, but the number of jobs affected there has not yet been made public.

Last April, the company shuttered a Danville, Illinois Quaker Oats plant, destroying 510 jobs in that small town, after a salmonella contamination incident that required a product recall. The Danville plant also would have required investment to modernize the facility.

PepsiCo’s layoffs are part of a massive wave of job cuts over the last two years that has spread across industries. Thousands of workers have been laid off this year as companies look to increase profits by restructuring their labor force to cut costs and extract as much wealth per worker as possible.

While the company’s statements point to “changing consumer behavior,” i.e. lower demand for its products, as a main cause of cuts, analysts also point to PepsiCo’s raising prices on its commodities over many years.

The company reported gross profits of $50.2 billion for the year ending September 30, 2024, a 1.71 percent increase over 2023. The year before, PepsiCo annual gross profit was $49.6 billion, a more than 8 percent increase from 2022.

Workers at the plant on the south side of Chicago last Monday reported arriving to locked gates as well as delivery drivers unaware the plant was shut down permanently. The only indication was the increased security. 

Adding insult to injury, PepsiCo had police escort workers off the Chicago plant property. The company said in a statement workers would receive 60 days of severance pay.

PepsiCo also said the plant is in a “60-year-old building that had physical limitations.”…[A] lot of work that needs to be done to it.”

In interviews with WGN9 news, PepsiCo workers described the situation as gut-wrenching.

Another worker, Daniel Walker, explained the confusion and abruptness of the layoff to WGN9 news. “They made it seem like they woke up yesterday and were going to shut [the plant]. They couldn’t answer no questions.”

In response to PepsiCo’s action, Teamsters Local 727 officials claimed that the decision to close the plant was in retaliation for a new contract with PepsiCo this summer.

A Teamsters official also stated PepsiCo was in violation of the Worker Adjustment and Retraining Notification (WARN) Act, a US labor law that requires employers of more than 75 full time workers to provide 60 days advance notice of plant closings and mass layoffs.

But PepsiCo’s closure of the plant is an exposure not only of PepsiCo’s view of the workforce as expendable, but also Teamsters Local 727 bureaucracy. The Secretary-Treasurer of 727, John T. Coli, has only hinted at some vague legal action the union may attempt, rather than mobilizing the union’s nationwide membership in defense of jobs.

The current contract language contains no concrete protection against layoffs or plant closures. The union bureaucracy’s public comments indicated that, as far as it is concerned, these actions would have been fine if the company had told the workers and the union 60 days before Monday that they would all be losing their jobs.

If the company is preparing to eliminate more jobs, workers must be made aware and organized to fight against corporate assault on jobs. The Teamsters bureaucracy resists this, avoiding strike action at any cost.

In April this year, during contract negotiation, 95 percent of Teamsters Local 727 members at Pepsi voted to authorize a strike.

Similarly, the Teamsters called off strike action against Anheuser-Busch at the last minute earlier this year, abandoning hundreds of striking Molson Coors brewery workers into accepting a sellout contract after three months on strike, or the Teamsters abandoning 22,000 workers at Yellow Freight who were laid off in 2023.

The German government’s “security package”: a further step towards a police state

Marianne Arens

Germany’s Scholz government is in the process of building a police state against the working class. This is demonstrated by the new “security package” from Interior Minister Nancy Faeser (Social Democrat, SPD). The package further undermines the right of asylum, tightens gun laws and gives the federal police and the domestic intelligence service more powers.

Minister of the Interior Nancy Faeser and her Polish counterpart Tomasz Siemoniak at the heavily guarded Polish border with Belarus [Photo by gov.pl / CC BY 3.0]

The package, which consists of two new laws—“Improving Internal Security and the Asylum System” and “Improving the Fight against Terrorism”—was adopted in the Bundestag (parliament) on October 18 with the votes of the coalition parties, the SPD, Liberal Democrats (FDP) and Greens. Minister Faeser commented that it was “the right answer to the current threats from Islamist terrorism, from antisemitism, from right- and left-wing extremism.”

However, the package was partially blocked on the same day by the Bundesrat (Upper Chamber), which objected to not providing biometric data matching for the security authorities. At the same time, the Christian Democrat (CDU/CSU) state premiers made it clear that the package did not go far enough for them, and the CDU interior minister of North Rhine-Westphalia, Herbert Reul, called on Deutschlandfunk radio for even more leeway for the police and the Office for the Protection of the Constitution, as Germany’s domestic intelligence agency is called.

Meanwhile, large parts of the package concerning the right of asylum and the law on firearms had already come into force at the end of October.

Attacks on refugees

The attacks on the right to asylum in particular are aimed at dividing and intimidating the working class. They expand the “major repatriation package” that the Scholz cabinet passed in June. The door is being opened to arbitrary actions, because in the future, the grounds for deportation will also include crimes with a “xenophobic or inhumane” motive, including “antisemitism, racism, sexism or queer hostility.”

The number of deportations, which has already increased significantly, is set to rise sharply again. Almost 10,000 people were deported in the first half of 2024. The government is now also in negotiations with Turkey about weekly mass deportation flights. Since August, deportations have also been taking place to Afghanistan, and Minister Faeser promises: “We are currently working on Syria.”

The asylum and residence laws are being increasingly restricted. For example, the aim is to withdraw all benefits from so-called “Dublin cases,” i.e., people who are already registered in another EU country, within two weeks. In addition, the double punishment of convicted criminals through deportation is to be enforced even more rigorously. In future, anyone entitled to asylum who briefly visits their home country will lose all protections.

The aggressive political agitation has led to a wave of protest letters and many people leaving the Green Party. According to Pro Asyl, the provisions are “obviously contrary to the German constitution and European law.” However, “it cannot be ruled out that some authorities will begin to try to implement the will of the legislature 1:1” and that “those affected will not have sufficient support for legal action.” As a result, “homelessness of people seeking protection, which has so far been unknown in Germany, could actually occur,” warns Pro Asyl.

A declaration against the new laws has thousands of signatures, including organisations such as Amnesty International, Pro Asyl, various charities including Der Paritätische, Deutsches Kinderhilfswerk, Internationaler Bund (IB), IPPNW, Kindernothilfe, Save the Children, Terre des Hommes, etc. The declaration states:

People who have fled to Germany are part of our society: they work and get involved here, raise their children here and belong here. The misconduct of individuals must never lead to the blanket stigmatisation, racialisation and labelling of certain groups of people as not belonging. We will not be divided.

Gun control and the police

In order to strengthen “internal security,” gun laws are also being tightened. Not only should the trustworthiness of gun owners be better checked in the future, the ban on knives is being extended and will in future apply to public festivals and other public events, as well as to public transport, train stations and all “crime hotspots.”

Clubs for hunters and marksmen are already opposing this, arguing that people who are about to commit terrorist acts like those in Mannheim or Solingen are hardly likely to care about such administrative offences.

Enforcing knife bans requires significantly more police officers, who must also be given more powers. For example, they must then be allowed to carry out checks without prior suspicion. This is exactly what the government intends to do, as it increasingly tramples on fundamental democratic rights such as freedom of expression and assembly.

In recent months, the police have been deployed with increasing frequency to suppress peaceful rallies, for example by environmental activists of the Last Generation or by people protesting against the Israeli massacre of Palestinians.

The consequences of this can be seen in a statistic recently published by the dpa news agency. It has evaluated police reports this year and concludes that police officers have already shot 17 people in 2024. This is significantly more than in the same period in all the years before. Police have very often shot and killed people “who were in an exceptional psychological situation or were already being treated for mental illness.”

Heated atmosphere

In public, almost all the voices to be heard from the media and political parties are those that support the government or call on it to enact even tougher laws.

For example, Sahra Wagenknecht criticises the Interior Minister from the right. The BSW chairwoman writes: “For years, Interior Minister Faeser has slowed down the fight against uncontrolled migration … Her failures are being paid for by citizens, local authorities and the police every day.” According to Wagenknecht, in the evenings, train stations “have become no-go areas, especially for women.”

The mainstream media (not only the tabloid Bild) carry reports almost daily on “foreign criminals,” “integration refuseniks” and the “failure of the asylum system,” etc.

In this heated atmosphere, observers from charities Diakonie and Caritas at Frankfurt Airport have reported an increasing number of truly brutal deportations. People are taken to the flights without the barest of necessities, “in slippers and flip-flops,” and often handcuffed. In most cases, those affected have had no opportunity to pack or withdraw money from their accounts beforehand.

One terrible example is the deportation of 18-year-old Aysu on September 12 from Hesse, where she could have started training as a nursing assistant. She was deported to Azerbaijan, where she has no family or friends. This happened completely unexpectedly for her foster family.

While the daily life of the population is becoming increasingly insecure in terms of work, family and finances, the coalition government’s “security package” is playing into the hands of growing fascism and the far-right Alternative for Germany (AfD), whose programme of “remigration” it is effectively adopting.

This can only be understood in the context of the current attacks on wages and jobs. The railways, public services and car industry (most recently at VW) are cutting jobs, closing plants, privatising and cutting wages, while the costs of the pro-war policy are exacerbating the situation. This is provoking explosive class struggles. That is why the government is striving for more “security” in an almost panicked manner—not for working people, but for the ruling class and the capitalist state.

The foreign policy of the bourgeois politicians shows what they are capable of. All the establishment parties, from the coalition government and the opposition, support Israel’s genocide in Gaza. In Ukraine, they are arming the Zelensky regime, which openly relies on fascists.

Faeser’s idea of “security” was demonstrated this week in Poland: she visited the border with Belarus, which is guarded by metres-high border fences, barbed wire, an electronic surveillance system and heavily armed security guards, where she suggested that EU Frontex forces should also be deployed in the future.