Moody’s cuts US credit rating as debt crisis grows

Nick Beams

Concern over the rise and rise of US debt as the Trump administration seeks to push through its “big beautiful bill” of tax cuts for corporations and the ultra-wealthy has again come into the financial spotlight with the decision by Moody’s to cut the credit rating for the US from its top grade.

The decision, announced last Friday after Wall Street had closed, means that the US no longer enjoys the top rating from any of the three major agencies—the first time in history this has happened.

The US Dollar

Moody’s cut the US rating from triple A to Aa1 and changed its outlook from stable to negative. Fitch and S&P had already downgraded the US from the top rate.

Reporting on the decision, the Financial Times (FT) said it had come when “investors are growing increasingly concerned about the US’s fiscal trajectory” as Trump and the Republican party are “pursuing a budget bill that is widely expected to increase debt significantly over the next decade.”

Announcing its downgrade, Moody’s said: “While we recognize the US’s significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics.”

It forecast that over the next decade, annual federal deficits would rise to 9 percent of GDP by 2035, compared to 6.4 percent last year.

Even more significant was its forecast for the increase in payments for a rising interest bill. It predicted that due to higher interest rates since 2021, “federal interest payments are likely to absorb around 30 percent of revenue by 2035, up from about 18 percent in 2024 and 9 percent in 2021.”

It continued: “This one-notch downgrade… reflects the increase over more than a decade in government debt and interest rate payment ratios to levels that are significantly higher than similarly rated sovereigns.”

As a result of its decision on the US government, Moody’s also lowered its ratings on several large American banks, including Bank of America, JP Morgan Chase, and Wells Fargo.

The Moody’s decision had immediate consequences, reflecting concerns in financial markets about the financial position of the US and the stability of the dollar as the global currency.

The yield (interest rate) on 30-year Treasury bonds rose by 0.13 percentage points to reach 5.03 percent at one point yesterday, exceeding the rise during the turmoil after the announcement of the Trump tariff hikes last month. The dollar fell by 0.7 percent against a basket of currencies.

One of the fears in some sections of the financial markets is that the US could experience a “Liz Truss moment”—a repetition on a larger scale of the financial crisis in the UK in September 2022 when her short-lived Tory government sought to provide major tax cuts to the wealthy and corporations, supposedly to promote growth, by increasing debt.

In a post on X, billionaire founder of the hedge fund Bridgewater, Ray Dalio, who has continually warned of the rise in debt, wrote: “For those who care about the value of their money, the risks for US government debt are greater than the rating agencies are conveying.”

There have been a series of warnings about the state of the US economy and the financial position of the government.

The head of JP Morgan, Jamie Dimon, told his firm’s investor day meeting yesterday that financial markets were not taking into account the impacts of a potential downturn.

“Credit today is a bad risk,” he said, “The people who haven’t been through a major downturn are missing the point about what can happen in credit.”

In an interview with the FT, the head of the Congressional Budget Office, Phillip Swagel, warned that the Trump tariff war could be a “tipping point” for foreign investors’ willingness to hold US assets.

The flows of finance into the US, buying up American assets, enabled the financing of government debt and deficits. But now, there is a “constellation of worries that a hesitation among global investors to put capital into the US, or even just to rebalance in a way that diminishes their interest in the US securities, would affect the dollar.”

He said the sentiment among senior global financial officials at the meeting of the International Monetary Fund last month was “really the most negative I can remember.”

Nicolas Trindale, a fund manager at the French financial firm Axa, said the downgrade was a “stark reminder that the US should not take for granted its ‘exorbitant privilege’ that enabled it to issue debt at a relatively lower cost despite a very high fiscal deficit.”

Comments by Yesha Yadav, a professor at the Vanderbilt Law School who studies the Treasury market, to the FT pointed to the political thrust contained within the Moody’s decision.

It was, he said, the “latest reality check on an increasingly bleak prognosis for US government debt management” and a “scolding to policymakers to focus on what reforms are needed to ensure that US credit retains its sheen as the world’s essential risk-free asset.”

There are two aspects to the debt crisis. It has objective roots in the deep-seated crisis of US capitalism, which has been building over decades. But it is also the outcome of political decisions made by the ruling elite in response to it.

One of the chief components has been the ever-increasing outlays on armaments as US imperialism has sought to counter its economic decline through the use of military might.

Over the past 15 years, particularly since the financial crisis of 2008, the coffers of the Treasury have been the source of government bailouts for major corporations to the tune of hundreds of billions of dollars.

The Federal Reserve has opened its spigots to supply trillions of dollars of ultra-cheap money for financial speculation, lifting the fortunes of the financial oligarchs to stratospheric heights.

Calls for “reforms” do not mean any reversal of these disastrous policies, but rather an intensification of the onslaught against the working class now being implemented via the budget reconciliation process aimed at slashing hundreds of billions of dollars from Medicaid and other vital social services.

Pro-EU candidate Dan wins Romanian presidential elections

Andrei Tudora

Presidential candidate Nicusor Dan waves to supporters after winning the second round of the country's presidential election redo in Bucharest, Romania, early Monday, May 19, 2025. [AP Photo/Vadim Ghirda]

The pro-EU candidate and mayor of Bucharest, Nicușor Dan, has won the presidential elections in Romania, ostensibly ending a political crisis that began with the annulment of the elections in December 2024. Dan secured over 53 percent of the vote.

With a relatively high turnout of 64.75 percent—an increase of over 10 percent compared to the first round—the result reflects a broad rejection of the Trump-inspired rhetoric espoused by his far-right opponent, George Simion of the fascist AUR (Alliance for the Union of Romanians) party.

Simion had pledged to fire 500,000 public sector employees, following the model of Trump and Elon Musk’s “Department of Government Efficiency.” He was backed by international far-right figures like Steve Bannon and promoted various fascist conspiracy theories, including a version of the “Great Replacement” directed against migrant workers in Romania. Simion also received the backing of Benjamin Netanyahu, via a message relayed by his physician, Herman Berkovits. Simion had previously boasted that he would defy international court rulings to invite the Israeli war criminal to Bucharest.

Dan’s campaign capitalized on the widespread rejection of Simion’s fascistic “national revival” and channeled that sentiment into the dead end of Romanian and European bourgeois politics. With support from all mainstream parties and media outlets—including factions of the Social Democrats and the pseudo-left—it avoided any serious discussion of the urgent issues facing the working class. Even the real threat posed by the AUR and Simion was downplayed, with criticism largely focusing on his alleged “pro-Russian” leanings. In recent months, Romanian journalists have exposed a network of fascist paramilitary groups and training centers, yet these were largely silenced during the campaign, along with their ties to parts of the Romanian state and the influential Orthodox Church.

In reality, AUR is set to benefit politically in the coming period, as it will become the sole parliamentary opposition to Dan’s new government. Romania’s semi-presidential system theoretically grants limited powers to the president, primarily over foreign affairs and the military. In practice, however, these powers—combined with authority over judicial and intelligence appointments—make the presidency the central force in Romanian political life, shaping parliamentary majorities and executive leadership.

Dan has already announced plans to appoint Ilie Bolojan, former interim president and a leader of the National Liberal Party, to head a “government of national unity” composed of all “pro-Western” parties. As both Bolojan and Dan have expressed, this government’s main goal will be to implement sweeping austerity measures to close the budget deficit and fund a massive increase in military spending.

In his first speech on Sunday night, Dan stated that his top priority would be to assess “where we are on security and the ReArm program” (a reference to an EU-backed rearmament initiative). He also warned of a “difficult period” ahead that would be “necessary to economically balance this economy.”

Dan reiterated the expansionist ambitions of the Romanian ruling class toward neighboring Moldova. Thanking Moldovans with Romanian citizenship who had voted for him, he declared: “I assure them that Romania will always be there for them, to help them on their European road and to one day be together.” One only needs to imagine the uproar in European capitals had Russia’s Vladimir Putin made a comparable statement about a neighboring country.

The campaign itself was shaped by mounting geopolitical tensions from the war against Russia and growing frictions among the imperialist powers. The strengthening of a Polish-Romanian alliance against Russia enjoys bipartisan support from the ruling classes in both countries. In Poland, the first round of the presidential election also took place on Sunday. Warsaw mayor Rafał Trzaskowski, backed by Donald Tusk’s Civic Platform, won just over 30 percent of the vote, ahead of hard-right PiS candidate Karol Nawrocki. Simion had endorsed Nawrocki and appeared with him in Poland last week. In turn, Tusk recorded a video message in Romanian before the election, urging voters to support Dan.

In neighboring Hungary, the Romanian elections became a flashpoint between two rival factions of the ruling class. During the runoff campaign, Viktor Orbán expressed support for Simion, praising his fascist rhetoric about a “Christian Europe.” This gave Péter Magyar—Orbán’s millionaire nationalist challenger who long benefited from his regime—an opportunity to attack Orbán from the right. Magyar accused him of “betraying our Hungarian brothers in Transylvania” and staged a PR march from Budapest to Oradea in Romania. Leaders of the UDMR (Democratic Alliance of Hungarians in Romania), who have dominated Hungarian-majority regions since the 1990s, also criticized Orbán.

Magyar was exploiting the widespread fear among ethnic Hungarians in Romania of Simion, a professional provocateur who has incited violence against the Hungarian minority in the past. Though this group has long been courted by Orbán and the UDMR, their regions consistently rank among the poorest in the country, despite nationalistic posturing and endless promises of investment.

An important ally of Dan during the election was the regime of Maia Sandu in Moldova. In her congratulatory message, Sandu praised Dan as “a powerful voice for liberty and democracy.” But Sandu—a Romanian national and former World Bank adviser—has consolidated her power through the banning of opposition parties and imprisonment of political rivals. The mobilization of Moldovan voters was key to Dan’s qualification for the runoff.

One of Dan’s most significant international backers was French President Emmanuel Macron, who publicly endorsed him before the election and was among the first leaders to speak with him on Sunday night.

Throughout the campaign, Dan was the most consistent advocate of unconditional support for Ukraine. He explicitly tied Romania’s “national security” to Russia’s defeat, while maintaining deliberate ambiguity about sending Romanian troops to Ukraine—despite widespread public opposition to the war. In fact, Simion’s perceived resistance to further aid for Ukraine was a major reason for his strong showing.

Romania’s ruling class has, for now, succeeded in suppressing anti-war sentiment and opposition to austerity by exploiting widespread disgust toward the Trump-style figure of Simion. They could do so only because of the complete political disenfranchisement of the working class and the bankruptcy of the post-Stalinist Social Democratic Party (PSD) and the trade unions. Calls by pro-imperialist “lefts” such as MP Victoria Stoiciu to “reset” the PSD or to build new political initiatives around the unions must be firmly rejected by workers as political traps.

DOGE shuts down AmeriCorps programs nationwide, affecting education, disaster services and environmental programs

James Vega & J. Cooper

In this Jan. 16, 2020 photo, Nicholas Thomas, left, and Joe Wright, right, prepare school safety signs as part of the AmeriCorps Urban Safety Program at Wayne State University's Center for Urban Studies. [AP Photo/Corey Williams]

A sweeping $400 million cut to the federal budget has forced AmeriCorps to shut down programs across the country. This reduction—about 41 percent of the program’s total $1 billion annual budget—has sent shockwaves throughout the US.

The cuts have ended or disrupted over 1,000 programs nationwide, offering a wide range of services, including education, disaster response, environmental conservation, housing support, and food security efforts. Over a quarter of AmeriCorps staffers provide educational services, such as tutoring, classroom assistance, youth development or after-school programs.

The decision, led by the Department of Government Efficiency (DOGE) under the Trump administration, officially ended funding for AmeriCorps in Michigan on April 25, 2025, the first state to be hit, which was followed by drastic cuts to all 50 states receiving federal funds.

About 85 percent of AmeriCorps full-time staff were placed on administrative leave, and 32,000 volunteers were immediately displaced, with many facing termination by late June. However, with 80 percent of the program’s initiatives axed by DOGE, the number of people losing their positions will likely be much higher.

“I’m hearing that AmeriCorps NCCC [National Civilian Community Corps] has fallen victim to the massacre of government programs,” posted Nicole Allen on Facebook. “I reflect on my own experience in the program, the 4000+ hours of service I completed … I promise you, 20-year-olds making $200/week are not the cause of our country’s financial crisis.”

Until late April, AmeriCorps operated in all 50 states, employing approximately 500 to 650 full-time staff members who supervised around 200,000 volunteers. Officially referred to as “volunteers” or “members,” these workers receive poverty-level wages in the form of stipends. Some receive health insurance, childcare or housing support. Young people largely “volunteer” for these low-wage, temporary positions due to a lack of decent job prospects. Even supervisors, including program coordinators and managers, typically only earn between $35,000 and $80,000 annually.

Exploiting the difficulties of finding jobs, the AmeriCorps program deploys staffers to fill in the gaps due to the systematic underfunding of education, disaster relief, environmental remediation, or social supports. The elimination of these vital programs will devastate many communities.

AmeriCorps was officially established in 1993 through the National and Community Service Trust Act, signed into law by President Bill Clinton. It incorporates the VISTA program (Volunteers in Service to America, founded in 1965 as a domestic counterpart to the Peace Corps) and the National Civilian Community Corps (NCCC).

The WSWS explained the explosion of volunteerism under George H.W. Bush and then Bill Clinton, following the drastic austerity years of the Reagan-Bush administration, in which tens of thousands of jobs were destroyed, the industrial Midwest turned into the “rust belt,” and dozens of communities were decimated.

Appealing to the sincere sentiments of the population and exploiting the massive growth of social inequality, the AmeriCorps program targeted young people who had no political or historical frame of reference, thinking they could “change social ills one good deed at a time.”

Since its inception, AmeriCorps, like the Peace Corps and VISTA, has provided cheap labor to enable non-profit organizations, educational institutions, and even religious charities to benefit from federal subsidies. With each successive administration, whether Democrat or Republican, demands for Americans to “volunteer” for “national service” have grown.

The World Socialist Web Site wrote as far back as 2008:

Every year, new initiatives were developed by both Democrats and Republicans to promote volunteerism while cutting social programs. These include naming the Martin Luther King Jr. holiday a day of national service; General Colin Powell establishing the President’s Summit for America’s Future to encourage volunteerism; and Clinton resuming Bush Sr.’s “Daily Points of Light Award.” In 2001, President George W. Bush went even further, launching his faith-based community initiatives.

Poverty, as a policy, has never been pursued so aggressively (and successfully) as today. Those who are responsible for these policy decisions—tax cuts for the rich, shredding the social safety net, destruction of public education, etc.—tell the working class to volunteer!

Over the last 35 years, school districts, disaster aid non-profits, fire-prevention programs, food pantries and other charitable entities have all shed jobs and come to rely on super-exploited volunteer labor. The cuts to AmeriCorps will be the final blow to countless parts of the disappearing social safety net in the US.

The Mosaic in Action (Texas) lost a team that was set to contribute 2,000 hours to helping homeowners recover from natural disasters. A 2023 American Climate Corps initiative, which trained youth in clean energy and climate resilience, was shut down in January 2025. The cuts will end programs like the Forest Corps, which focused on wildfire and habitat protection. Programs aiding the homeless have been terminated in major urban centers like Chicago. AmeriCorps also helped staff larger organizations like Habitat for Humanity, Teach for America, and Big Brothers Big Sisters of America.

Nationally, AmeriCorps supplies more than 54,000 tutors, mentors, classroom assistants and reading and math specialists to schools and after-school programs. “I am heartbroken. And I feel betrayed. This can’t be our future. This is not a future that I want,” said a @_UWNNS_ on Instagram, who established the United Readers Program in Nevada.

“Anyone else feeling defeated and hopeless or just me? My program got cut last week and I have been filled with a mix of anger, sadness, and all around panic. I only have health insurance now until the end of the month and only 1 more living stipend check….” reads a post on the r/AmeriCorps subreddit. Others mention that as AmeriCorps “volunteers,” they are not eligible to collect unemployment insurance.

In Michigan, school mentoring and tutoring programs, administered by the Michigan Education Corps (MEC), will terminate at the end of the school year.

One former teacher who spoke with the World Socialist Web Site had retired after 30 years in the classroom, and then signed up to tutor through the Michigan MathCorps. She told us, “The future of the program and its continued operation is uncertain. While I think things will get better, it remains unclear if MEC will continue into the next school year due to the budget cuts and changes.”

 “I think it is really robbing the youth of the future, both the students and educators. Students expressed sadness at the program changes and sudden educational departures. The program has so much value in providing essential educational support. I think it’s robbing the world and community,” she said.

Michigan Education Corps volunteers were told to stop all activities immediately under the federal stop-work order. The order instructed grantees to halt any AmeriCorps-funded operations upon receipt of the notice. The Michigan College Access Network (MCAN) lost support for initiatives like Advise MI and the College Completion Corps, which helped students apply for college and financial aid, and access to the Segal AmeriCorps Education Award that can help pay for college or student loans.

The Detroit Free Press noted that from January 2024 to February 2025, “In Michigan, more than 7,900 AmeriCorps members and senior volunteers worked at more than 1,300 local service sites.” The federal funds invested totaled more than $31.6 million, according to an AmeriCorps report, and “generated more than $17.5 million in outside resources from businesses, foundations, public agencies, and other sources…”

These cuts affect programs in every state. Katie Loudin posted on Facebook, “My heart is heavy today. Over 200 AmeriCorps members have been cut from their volunteer positions across West Virginia…. [They] were tutoring struggling students win the afterschool programs in math and reading in Lewis County; they were connecting with youth, sourcing locally-grown food, and connecting it to local markets at Grow Ohio Valley; they were creating new pathways out of poverty and workforce training programs at High Rocks in the mountains; they were engaging isolated community members through meaningful programming at our senior centers; they were coordinating food pantries, affordable housing construction, economic resilience, and so much more … feeling heartbroken.”

UK Special Forces personnel give eyewitness accounts of officially sanctioned assassinations and war crimes in Afghanistan

Harvey Thompson

The BBC’s documentary programme Panorama aired Special Forces: I Saw War Crimes, is available for the next 11 months on BBC iPlayer.

 A team of reporters has been investigating unlawful killings by UK forces in Afghanistan for several years and produced an important episode, SAS Death Squads Exposed: A British War Crime? in July 2022, which forced the government into calling an inquiry the following October.

Special Forces: I Saw War Crimes, screenshot from BBC website [Photo: bbc.co.uk]

The latest programme is based on conversations with more than 30 sources who served with or alongside UK Special Forces in Afghanistan during the US-led occupation. Their words are spoken by actors to prevent identification and retaliation.

Their testimony describes the murder of unarmed Afghans in their sleep; the execution of handcuffed detainees, including children; psychotic killing raids; personal kill tallies; and the systematic cover-up of all incriminating evidence, including the deletion of files and the closing down of investigations.

Crimes took place over more than a decade, far longer than the three-year-period (2010 – 2013) being examined by the ongoing Independent Inquiry relating to Afghanistan, which opened in London in October 2023.

Referring to the largely concurrent US-led invasion and occupation of Iraq from 2003, witnesses told the programme that the Special Air Service (SAS) “had already developed a method of covering up unlawful killings in Iraq” by planting weapons (known as “drop weapons”) on the bodies of their victims to make them look like armed fighters.

This method became routine in Afghanistan. One veteran told Panorama, “They’d search someone, handcuff them, then shoot them” [before removing the handcuffs] and “planting a pistol” on the body.

One source who had served with the SAS added, “You’d see a lot more folding stock AKs [AK-47 rifles]. Because of the way they’re designed to fold they were easier to carry in day sacks, easier to bring on to the targets and plant by the body to make it look like the person was holding a rifle when they were shot.”

Another source who had served with the SAS said bluntly, “Everyone knew what was going on… so there was implicit approval for what was happening.”

According to sources, more junior members of assault teams were told by more senior SAS operators to kill male detainees.

Children were not exempt, he recalled, “They handcuffed a young boy and shot him. He was clearly a child, not even close to fighting age.”

The Special Boat Service (SBS) is also implicated for the first time in executions of unarmed and injured Afghans, with Panorama speaking to at least 10 sources who served with or alongside the regiment.

One of these explained that wounded fighters were routinely killed, describing one operation when an Afghan had been left shot but still breathing: “The medic was standing over him, treating his injury… Then one of our blokes came up to him… and there was a bang. He’d been shot in the head at point-blank range… I can’t recall us taking a single injured insurgent back to base for treatment. They were shot… there and then… these are not mercy killings, its murder.”

A veteran who served with the SBS said some troops had a “mob mentality” and described their behaviour on operations as “barbaric,” expressing “serious psychopathic traits.”

A former Intelligence Officer who had been attached to the SBS described the doctoring of operation accounts, saying, “You could see from the photographs taken on site that the accounts being given by the SBS guys to justify certain killings just didn’t add up. They say they’ve been caught in a firefight, but in the photos, you’d see these were multiple clean headshots.”

Panorama was also able to speak to former members of Afghan Special Forces (ASF) who served alongside the SBS around 2020. One told of an operation where his British mentors shot a boy of 13 or 14. He was told his squad should “destroy all the evidence of what happened that night.”

Narrator Richard Bilton explains of “the same squadron that kept a kill tally in Iraq. In Afghanistan, that squadron killed an average of 2.7 people on every operation. Hundreds were killed.”

A former Intelligence Officer who had been attached to the SAS corroborated this: “It was all about the stats. When the numbers were read out at the morning meeting at NATO headquarters, they wanted the SAS task force to have high numbers. It was seen as a metric of success.”

Witnesses tell of one member of an SAS squadron who personally killed dozens of Afghans on a single tour. A veteran with the SAS said, “It seemed like he was trying to get a kill on every operation… He was notorious in the squadron. He genuinely seemed… like a psychopath.”

In one incident sources say was notorious inside the SAS, the soldier slit the throat of an injured Afghan after telling an officer not to shoot the man again, “because he wanted to go and finish the wounded guy off with his knife.”

Another witnesses, who said that among the SAS were “lots of psychotic murderers,” described how, “On some operations, the troop would go into guesthouse-type buildings and kill everyone there… They’d go in and shoot everyone sleeping there, on entry.”

Panorama also examined the methods used to cover up these crimes. According to the testimony, officers would help to falsify post-operational reports. One of the veterans explained, “We understood how to write up serious incident reviews… If it looked like a shooting could represent a breach of the rules of conflict, you’d get a phone call from the legal adviser or one of the staff officers in HQ. They’d pick you up on it and help you to clarify the language. ‘Do you remember someone making a sudden move?’ ‘Oh yeah, I do now.’ That sort of thing. It was built into the way we operated.”

Intelligence Officers watching the operations on live drone feeds, and so witnessing war crimes in real time, were requested to “dig up” data on victims to retrospectively link them with the Taliban.

The programme pointed to Operation Northmoor, an investigation launched by the Royal Military Police in 2014 into allegations of over 600 offences by UK forces in Afghanistan, including the killing of children. The investigation was terminated in 2019 without any prosecutions, despite the proven permanent deletion of evidence by the Special Forces.

Panorama revealed for the first time that then Conservative Prime Minister David Cameron was repeatedly warned during his term in office that UK Special Forces were killing civilians in Afghanistan.

Bilton narrates, “Senior people were told about the killings, but they weren’t stopped. We found evidence of a widespread cover-up lasting years. The cover-up started with Special Forces on the ground. It was continued by some of Britain’s most senior officers, and it was maintained by politicians and the Ministry of Defence.”

A spokesperson for Cameron was compelled to reply to Panorama, saying, “any suggestion that Lord Cameron colluded in covering up allegations of serious criminal wrongdoing is total nonsense.”

Bruce Houlder KC, a former director of service prosecutions, told the programme he hoped the public inquiry would examine the extent of Lord Cameron’s knowledge of alleged civilian casualties following operations by UK Special Forces.

The following are indicted with full complicity; General Sir Gwyn Jenkins, head of UK Special Forces in Afghanistan for a year from 2011 and former Director Special Forces; General Sir Mark Carleton-Smith, the former head of the British Army; and Lieutenant General Jonathon Page, another former Director Special Forces.

The final segment of the Panorama programme looks at the veto by UK Special Forces of over 2,000 asylum claims by former members of the Afghan Special Forces (ASF), who could potentially have been called to give evidence of war crimes in the ongoing London inquiry. A former ASF member concluded, “They don’t want us in the UK because of what we have witnessed.”

The programme revealed that the individual overseeing this mass rejection of asylum applications was Gwyn Jenkins. Special Forces: I Saw War Crimes was aired Monday May 12. On May 15, the Labour government’s Ministry of Defence promoted Jenkins to First Sea Lord and Chief of the Naval Staff, the head of the British Royal Navy.

Ukrainian and Russian officials meet in Istanbul

Jason Melanovski

From left, Russian Deputy Foreign Minister Mikhail Galuzin, Russian presidential aide Vladimir Medinsky, Head of the Russian General Staff Main Directorate Igor Kostyukov and Russian Deputy Defense Minister Alexander Fomin give an statement to journalists at the Russian consulate in Istanbul, Turkey, Ton Friday, May 16, 2025. [AP Photo/Ramil Sitdikov]

Ukrainian and Russian officials met in Istanbul, Turkey on Friday for the first direct talks between the two warring sides in the ongoing NATO-backed proxy war in over three years.

US and Turkish representatives were also present. The Trump administration is still attempting to reach an agreement with the oligarchic Putin regime to negotiate a settlement of the war that will ensure the maximum profit for American imperialism in whatever remains of Ukraine and the former Soviet Union more broadly.

During the talks, representatives of the Kremlin reiterated demands that Ukraine accept neutrality, renounce NATO membership, withdraw its troops from five Russian-occupied territories and guarantee language rights to Ukraine’s Russian-speakers; meanwhile, Ukraine demanded a 30-day ceasefire and direct talks between Putin and Zelensky. No concrete plan to end the war appears imminent, with the Ukrainian side labeling the Russian demands as “non-starters.” The only results of the talks so far were an agreement to exchange POWs and statements by both sides that they were prepared to continue to talk.

The right-wing dictatorial regime of Ukrainian President Volodymyr Zelensky was reportedly forced into the talks by US and European officials, after suggesting he would not authorize any Ukrainian delegation to meet with the Russian representatives. As a result, the talks, which were originally scheduled for Thursday last week, were postponed until Friday instead.

According to the Washington Post, “The U.S. and European officials stressed it was critical to at least send a delegation of senior aides including his chief of staff, Andriy Yermak, and Foreign Minister Andrii Sybiha, but faced repeated resistance from Ukraine’s leader.”

In the lead-up to the meetings, US President Donald Trump also publicly intervened, telling Zelensky directly on social media that Ukraine must participate in the Istanbul talks as he seeks a deal with Moscow amid his global trade war and push towards actual war with China.

Following Trump’s statement, Zelensky ultimately came out in support of the talks. He appointed Ukrainian Defense Minister Rustem Umerov to lead the negotiations, along with 12 other delegates. Among them was Oleksandr Poklad, the Deputy Head of Ukraine’s notorious Security Service (SBU), which has spent the last three years imprisoning thousands of Ukrainians on trumped-up charges of “treason,” including the Ukrainian socialist opponent of the war, Bogdan Syrotiuk.

The Russian delegation was represented by Vladimir Medinsky, who led previous talks in Istanbul in April 2022, and nearly came to an agreement ending the war in exchange for Ukraine terminating its drive to officially join NATO and accept neutrality, among other conditions. Ukraine ultimately withdrew from the talks after then-United Kingdom Prime Minister Boris Johnson flew to Kiev and urged Ukraine to “just continue fighting” in exchange for indefinite support from Western imperialism against Russia.

Zelensky later passed a law, with the approval of Ukraine’s parliament, forbidding any direct peace talks with Moscow during his presidency, as continuing the war had become an essential part of his regime’s ongoing existence.

Over three years later, hundreds of thousands of working-class Ukrainians and Russians have been killed, and billions of dollars have been spent by Western imperialism to fuel a proxy war that has seen Ukraine continue to incrementally lose territory to Russian forces and has brought the world closer to nuclear war than at any point since the Cold War.

While the working class has suffered immensely, the Ukrainian ruling class has further enriched itself throughout the war, taking advantage of billions of dollars in Western aid that have flowed into Europe’s poorest country.

According to recent comments made by the head of Ukraine’s Tax Service Ruslan Kravchenko to Ukraine’s Channel 24, the number of millionaires in Ukraine has increased by 61 percent in 2024 alone.

Seeking to preemptively sabotage any possibility of a negotiated settlement, the Ukrainian side had already publicly criticized the talks. They have focused on the absence of Russian President Vladimir Putin, who first proposed the talks last Sunday after Ukraine’s European imperialist backers threatened Russia with additional sanctions and a massive military buildup for war.

On Thursday, Zelensky flew to Ankara to meet with Turkish President Recep Erdoğan and released a statement on social media calling the Russian delegation “decorative” while claiming that the Ukrainian side “is of the highest level.” Following his meeting with Erdoğan, he once again publicly rejected giving up claims to Crimea as part of a peace deal reportedly proposed by the US, stating, “Crimea is Ukraine. Crimea is a Ukrainian peninsula.”

Further underscoring his rejection of the talks, Zelensky later flew to Albania to attend a summit of the European Political Community.

Fearful that the end of the proxy war in a negotiated settlement and the loss of a substantial amount of Ukrainian territory could spell both the end of his political as well as his actual life, as former Ukrainian Foreign Minister Dmytro Kuleba has warned, Zelensky is clearly appealing to the European imperialist powers, namely France, Germany and the UK, and against a Trump-managed peace treaty.

The Ukrainian ruling class and corporate media have likewise denounced the Istanbul negotiations as a sideshow.

“This is a negotiating farce,” Hanna Hopko, co-founder of the International Center for Ukrainian Victory, told the Kyiv Independent. “It’s already clear that Putin is just mocking (US President Donald) Trump.”

The negotiations were also ridiculed by the country’s far-right leaders, who fear that a US-backed negotiated settlement with Moscow could result in a reduction of their substantial power within the Ukrainian state.

As Bohdan Krotevych, former chief of staff of the infamous neo-Nazi Azov brigade wrote on X, “So in fact, if Putin doesn’t meet with Zelensky in person, it means he’s simply afraid of him. You can try to come up with excuses or fairy tales, but the fact remains. I can’t recall a single Russian leader who was this pathetic and cowardly.”

While the US has supported the talks, at least initially, on Thursday, US Secretary of State Marco Rubio revealed that, in reality, the Trump regime did not expect much from the Istanbul discussions to begin with.

“I don’t think we’re going to have a breakthrough here until President Trump and President Putin interact directly on this topic,” he said, following a meeting of Nato foreign ministers in Turkey.

Earlier in the day, Trump reiterated that ultimately he was seeking to negotiate a deal directly with Putin. On TruthSocial, he announced plans to speak with both the Russian president and Zelensky on Monday.

“Look, nothing’s going to happen until Putin and I get together,” Trump told the BBC while on board Air Force One.

Despite the public comments on ending the war coming from the Trump administration, there also clearly exists an opposing faction within the European and American ruling class that is counting on not only continuing the proxy war in Ukraine but expanding it.

Thus, Janis Sarts, director of the Riga-based NATO Strategic Communications Center of Excellence (StratCom), told the Ukrainian news site Gordonua.com, “I remain convinced the fate of peace in Ukraine will be decided primarily on the battlefield, not at the negotiating table.”

Whatever the outcome of the Istanbul talks, following the failure of its adventurist invasion of the Russian Kursk region, the Zelensky government is facing a deteriorating military situation as it continues to lose territory in an attritional war that has already killed hundreds of thousands of Ukrainian soldiers.

On Friday, Oleksandr Shyrshyn, battalion commander of the 47th Separate Mechanized Brigade, which received training from NATO and had recently taken part in operations in Russia’s Kursk and Belgorod provinces, resigned from his position, sharply criticizing Ukraine’s military leadership in the process.

“I have never received more stupid objectives than in the current direction,” Shyrshyn wrote in a Facebook post announcing his resignation. “Someday I will tell you the details, but the stupid loss of people, trembling in front of a stupid general, leads to nothing but failures.”

“I hope your children will also serve in the infantry and carry out your orders,” Shyrshyn wrote.

Power and Extraction: The Geopolitics of Rare Earth Elements

Joseph Grosso

On April 4, China’s Ministry of Commerce put export restrictions on seven rare earth elements (REEs). It is easy to scratch one’s head when restrictions are put on things called samarium, scandium, gadolinium, terbium, dysprosium, and lutetium but such elements are important components, particularly the magnets made with them that perform well at high temperatures (these magnets have 15 times the force of conventional iron magnets), of everything from phones, to hard drives, to electric vehicles, to flat screen TVs, to jet engines, to radar and sonar systems (i.e. military uses, no doubt on the minds of some policy makers. A single F-35 fighter jet uses 900 pounds of rare earth metals). There are 17 rare earths in all.

This is hardly the first time the Chinese government (CPP) has done this kind of thing. In July 2023, China announced it would restrict the export of gallon and germanium, materials used mostly on making solar panels and semi-conductors. Back in September 2010, China imposed an embargo on rare earth exports to Japan in the aftermath of a Chinese fishing boat colliding with two Japanese coastguard vessels (the captain of the fishing boat was arrested). The embargo lasted seven weeks. This new restriction is not an outright ban. Rather firms are now required to apply for an export license (16 U.S. entities were put on an export control list for dual-use materials). More of a slowdown than a ban. This, of course, is in response to Trump’s tariff mania. It appears most companies in the U.S. have some kind of stockpile available for the moment or at least the option to purchase the materials from companies that do.

Despite the name ‘rare earths’, rare earths are not especially scarce. The thing is they are usually scattered in low concentrations with other minerals and can be difficult and polluting to separate out into their pure forms. Whereas 30 years ago China was importing rare earths from the U.S., mining and, especially, processing are now dominated by companies in China. China currently produces 69 percent of global rare earth ores, performs about 90 percent of rare earth processing, including 99 percent of the world’s ‘heavy’ rare earth metals (heavy rare earths are generally less abundant than light rare earths due to their magnetic properties). A single refinery in Vietnam accounts for the other one percent of heavy rare earth processing but it has been out of operation the past year due to a tax dispute. China also produces 90 percent of the world’s rare earth magnets. Meanwhile the U.S. is down to just one rare earth mine, the Mountain Pass Rare Earth Mine located in California’s Mojave Desert. Yet over 80 percent of its output in recent years has been shipped to China for processing due to a lack of domestic capacity and expertise.

Mining has become a hard sell in the U.S. in part due to local resistance and environmental concerns. In China, the industry is helped by nearly 40 universities that specialize in extractive metallurgy and another 40 in mineral processing. In the U.S. that number is zero. At the moment fewer than 700 students are enrolled in mining-related fields. Though in the case of rare earths there are signs even China has grown weary of the pollution (including reports of poisoned crops and cancer villages). Starting around 2016 China began consolidating its large rare earth manufactures, closing the dirtiest mines, and outsourcing the mining to Myanmar (another dictatorship with few scruples). In 2014 Myanmar exported just over $1,5 million worth of rare earths to China. According to a report by Global Witness, the figure reached $780 million by 2021and continues to climb – supplying China with nearly half its rare earths with processing for reexport is still done in China (see Vince Beiser’s Power Metals: The Race for Resources that Will Shape the Future).

This dependence on China would seem the obvious reason for the Trump administration’s wacky talk about conquering Greenland. Trump is not the only one with eyes on Greenland, the likes of Jeff Bezos and Bill Gates have invested in companies prospecting there. However, there is the fact that Greenland has an artic climate that makes mining hard and costly, the place has only about 100 miles of roads, and there appears no shortage of environmentalists among its 56,000 residents. Greenland’s current government swept into power four years ago on an environmentalist agenda and soon passed a law banning uranium mining as well as freezing development of a rare earths mine.

Problems also abound in this silly mineral deal in Ukraine. Leaving aside he fact that many of Ukraine’s minerals are in territory currently occupied by Putin’s army, the last significant mapping of Ukraine’s resources took place in the Soviet era. Billions will have to be invested long before anything is dug out of the earth. The U.S. Geological Survey’s most recent Mineral Commodity Summary does not record Ukraine as having significant deposits of rare earths. Even if everything goes swimmingly, a rarity in mining, mines can take 10+ years to set up. By then both Trump and Zelensky figure to be long gone. Who knows if future parties will be motivated to enforce the deal or even recall it.

An important point about rare earths, and likely the other major reason the U.S. gave up on them, is that while they’re used in a great variety of things, those things usually only contain small amounts of rare earths, and usually they play supportive roles. For all the ink spilled about them, according to the U.S. Geological Survey the U.S. imported around $170 million worth of rare earths last year. Meanwhile between September 2023 and August 2024 the U.S. imported over $327 million of fresh potatoes and $300 million worth of potato chips. Because of the limited quantities needed by companies, the market for them can be quite volatile- in other words profits can be shaky. Low prices tend to turn off new investors and China’s dominance enables it keep prices low to discourage competition.

It is also worth noting that the CCP’s attempts at mineral restriction have had only mixed results. In the midst of the 2010 flareup, the Japanese government quickly passed a reform $1.2 billion package that featured five main pillars including developing stockpiles, developing technologies to use alternative materials and reducing the use of rare earths, and investment in mines in Australia. As a result, Japan’s dependency on China’s rare earths dropped from 90 percent at the time to 60 percent today.

Brazil and Vietnam have significant reserves of rare earths and figure to get more involved in the race. Mining will be with us for quite a while and more public investment in making the industry less destructive is necessary. Mines can also be unionized. In the U.S. the Defense Department is funding much of the work on rare earths (again, that military angle) but it needed always be so. This week the New York Times’ Science section featured an article on efforts to exact rare earth from mining wastewater- a faster and cleaner method than opening new mines. In the long run, companies may find technological solutions to deal with potential shortages of rare earths. For instance, in 2023 Tesla announced it had reduced the use of rare earths in its EV motors by 20 percent with plans to eliminate them entirely in the future.

There is no telling how this tariff battle will play out between Trump Administration and the CCP. As of this writing, Trump has announced a 90-day lowering of tariffs from 145 percent to 30 percent. It is possible some kind of deal will be reached shortly that completely restores the rare earths’ flow. However, one legacy left from the COVID pandemic is the importance of diverse supply chains. Another legacy is the critical importance of the environment, as well as workers’ rights. As the green transition unfolds there is an endless fight to keep the latter lesson at the forefront.

German auto industry crisis deepens as layoffs mount

Ludwig Weller

In March 2024, 10,000 employees demonstrated in front of the Bosch headquarters in Gerlingen near Stuttgart against layoffs

Massive job losses in the German automotive industry are announced almost daily. The supplier industry is being decimated by insolvencies. Large and medium-sized companies are closing plants or disappearing completely. Thousands are losing their jobs, and entire regions of the country are being affected.

Volkswagen and Mercedes report a drop in profits of up to 40 percent in the first quarter. Other German manufacturers have also reported significant drops in profits: Audi 14.4 percent, BMW almost 26 percent and Porsche 40 percent.

While the major car manufacturers are still in the black—Mercedes posted a quarterly profit of €2.3 billion—they are moving further and further away from the targeted double-digit profit rates. That is why they are planning a jobs massacre. Autoworkers are being made to bleed so that profits can be restored. Where this has little chance of success, the survival of traditional brands such as Opel (Stellantis) and Ford is at stake.

The auto companies point to the increased competitive pressure from Chinese manufacturers, whose electric models are technically more up-to-date, cheaper and significantly more popular, especially in China. Previous market leaders VW, Toyota and Tesla have had to cede their top positions in China to domestic car manufacturers.

However, the real reasons for the frontal assault on jobs and conditions lie in the rapidly changing world political and economic situation. The German automotive industry in particular is heavily export-oriented, dependent on globalised supply chains and therefore particularly affected by the drastic tariffs imposed by President Donald Trump. “The US tariffs that came into force at the beginning of April have virtually choked off the first positive business developments, especially in the European market,” says Ifo economic research institute expert Anita Wölfl.

The consequences of the high tariffs have so far only had a minor impact on the slump in profits in the first quarter. But they will be huge.

According to an article in the Frankfurter Allgemeine Zeitung (FAZ) headlined “Germany’s car companies are reeling from global politics,” the problems, “which are coming in from all sides are intensifying into what managers like to call a ‘perfect storm’ for Germany’s former flagship industry.”

The management boards of VW, Mercedes and BMW, as well as the FAZ, are not concerned with the fate of the autoworkers, but about their ambitious profit targets. The FAZ is therefore calling for more radical cuts. It was now “becoming increasingly clear that the reorganisation of the industry is still in its infancy. The outlook is uncertain, and the toughest cuts are still to come for the companies.”

These tough cuts are already on the horizon. According to a report in business weekly Wirtschaftswoche in the first week of May, Mercedes initially sent redundancy offers by email to 40,000 employees in the ancillary area, i.e., outside of production, as part of the “Next Level Performance” savings programme in order to force as many of them out of the company as possible.

Based on internal documents, Wirtschaftswoche reveals how workers are being put under pressure. The following is a quote from an email to employees: “Your job is disappearing; it will no longer exist.” If someone still wanted to stay, they were told that no suitable internal position was available. Even more direct is this quote: “Such an offer [of a redundancy settlement] will never come again. Think carefully about whether you want to accept it—after all, we no longer have any use for you.”

Mercedes intends to save €5 billion by 2027. The plans of Mercedes-Benz boss Ola Källenius (annual salary approximately €12.5 million) are very similar to those of VW, which agreed with the IG Metall union at the end of last year to cut up to 35,000 jobs and reduce wage levels by 20 percent.

Works Council Chairman Ergun Lümali, who is privy to all the plans, has essentially signaled his approval. He is IG Metall’s powerful man at Mercedes, holding many influential and well-paid posts: chairman of the Group Works Council, the General Works Council and the Works Council of the Sindelfingen plant; deputy chairman of the Supervisory Board of the Mercedes-Benz Group and a member of its Mediation Committee, Executive Committee, Audit Committee and Legal Affairs Committee.

The cuts programmes at Daimler Truck are also being drastically intensified. The scale of the job cuts is enormous, with 28,000 posts now to be axed. This means that more than one in four of the 103,000 employees worldwide would lose their jobs.

This time, the savings programme is called “Cost Down Europe” and covers almost all areas of the company—from production, administration and development to sales. Even the largest truck assembly plant in Wörth is affected, as are the sites in Gaggenau, Kassel, Mannheim and Stuttgart. In total, at least €1 billion are to be saved in order to achieve the extremely high profit margins.

The new CEO Karin Rådström (annual salary estimated at €10 million) and Supervisory Board Chairman Joe Kaeser had already promised a profit target of over 12 percent for 2025 and over 15 percent thereafter at the end of 2024. According to Kaeser, former CEO of Siemens (whose annual salary at times totaled €14 million), this was linked to the goal of becoming the largest truck supplier in the world “in the medium to long term.”

Just as the VW Management Board relies on the team around Works Council Chairwoman Daniela Cavallo, Mercedes boss Källenius can rely completely on Lümali, the IG Metall union and its apparatus of officials are nourished by Mercedes. Källenius assures us at every opportunity that he will push through the cutbacks “responsibly and together with the works council,” they duly preach.

At Volkswagen, the FAZ calls for intensified class warfare from above, with the 35,000 job cuts agreed last year being nothing more than a declaration of intent: “They must now be realised.” If management failed, it would be the final proof “that Germany’s most important industry is not in a position to prepare itself for global competition.”

According to various reports, including in the Braunschweiger Zeitung, the brand’s management board is planning to cease production at the Osnabrück plant altogether and close it down. Production of the T-Roc Cabriolet is only to continue until October 2027. It remains to be seen what will become of the plant and the 2,300 employees still working there. However, there have been several media reports that defence group Rheinmetall has expressed a strong interest in the plant.

The “transformation” of the automotive industry, which is taking place worldwide, is proving to be one giant jobs massacre. The trade unions—here IG Metall and in the US the United Auto Workers (UAW)—are completely on the side of the corporations.

In America, UAW President Shawn Fain is in favour of Trump’s tariff and trade war frenzy. On both sides of the Atlantic, the trade unions are defending the national profit interests of their respective corporations and governments and agitating against China. However, it is not the Chinese electric cars—or even the Chinese workers, who earn significantly less—that are the evil, but the capitalist profit system.