India-Taiwan Relations: What is the Way Forward?

Sumit Kumar Jha

The Modi government took many foreign policy initiatives to deepen India’s ties with the rest of the world soon after coming to power. One was to foster closer ties with the East Asian countries under its Act East policy. However in May 2016, after the completion of two years of the government, no serious efforts have been made to improve ties with Taiwan, which can play a vital role in India’s strategic and economic interests in East Asia. In the January 2016 elections, Tsai Ing-wen of the Democratic Progressive Party (DPP) was elected as the President of Taiwan, and she has announced her intention to prioritise relations with India.

 

Overview of Bilateral Relations

Post-independence, the bilateral ties between India and Taiwan ceased to exist when in 1950 India accorded diplomatic recognition to the People’s Republic of China (PRC). Further, during the Cold War, the prospect of having even informal ties between New Delhi and Taipei remained remote, as Taiwan joined the US-led block and India the non-aligned movement.

 

This changed in the 1990s when the Narsimha Rao Government reoriented India’s policy towards Taiwan in the face of India’s domestic and foreign policy challenges. Domestically, India had to deal with one of its worst economic crises. Externally, India needed to adapt to a new international order, where its time-tested friend, the Soviet Union, was no longer available to provide it financial and defence cover. Consequently, India and Taiwan set up unofficial relations in 1995 with the establishment of the India-Taipei Association (ITA) in Taipei. The two countries signed the Double Taxation Avoidance Agreement and the Customs Cooperation Agreement in 2011. These initiatives have increased trade between the two countries from US$1.2 Billion in 2000 to US$5.9 billion in 2014. In August 2015, Taiwan-based Foxconn, one of the largest hardware manufacturers in the world, announced an investment of US$5 billion in India. The two countries are also cooperating in the field of science, technology and culture; Taiwan provides teachers for several Chinese courses in India. Despite India and Taiwan having common reasons to accelerate their bilateral ties, the size of the relationship remains small.

 

The Way Forward

Strategically, both the countries have security threats from China. India has a long-standing territorial dispute with China and in fact, in recent times, Beijing has increased its assertive posturing on Indian territory. On the other hand, experts have opined that Beijing can use military power to annex Taiwan if their “one-China policy” comes under threat, considering it a breakaway from mainland China. Additionally, New Delhi and Taipei share the common interest of preventing China from making South China Sea its exclusive zone. Through this, Taiwan can further consolidate its identity as an independent state and India can ensure freedom of navigation in the South China Sea through which 50 per cent of its trade takes place. India can further expand its oil and gas exploration activities in the region.

 

Taiwan has a better understanding of China’s strategic depth because of their close geo-strategic proximity and linguistic and cultural ties. A closer relationship with Taipei will help New Delhi understand Beijing’s strategic thinking. While the Modi government has given special attention to developing triangular and quadrilateral coalitions with the US, Japan and Australia as part of its regional security strategy, and the inclusion of Taiwan can prove to be crucial in this endeavour.

 

Delhi can advance its economic interests by working with Taipei. The latter possesses huge foreign reserves and is known for its expertise in the field of hardware manufacture, construction, mines exploration, electronics, and automobiles, among others. Thus, it can undoubtedly play a critical role in the success of the current government’s Make in India, Digital India, and Skill India initiatives. A case in point being a possible collaboration between India’s expertise in software and Taiwan’s in hardware. Additionally, by providing a market of its size to Taiwan, India would be able to address the deepening economic ties between China and Taiwan.

 

Soft diplomacy has been given primacy in the current government’s foreign policy. In this, religious tourism has great potential, considering Buddhism is the majority religion and India is its birth place.

 

While it is true that one major obstacle that hampers close ties between India and Taiwan is India’s acceptance of the “one China policy”, this, should not deter New Delhi from seeking close security and economic ties with Taipei in the same way as Beijing is expanding its involvement with Islamabad in Pakistan-occupied Kashmir (PoK). India should take bold initiatives to reach out to Taiwan and it should also assert its right to decide what type of relations it wishes to have with Taiwan. It would be interesting to see how the DPP government and India sustain and expand their bilateral ties, with China in their backyard.

Governance & Strategic Communication: Keys to Stabilising J&K

Syed Ata Hasnain


With the durbar back in Srinagar, one of the first things the new government did was to convene a meeting of the Unified Command. That is most sensible because an early stock-taking of the situation and planning for contingencies for the summer is always necessary. Threats on the security front are multiple and need to be briefly outlined. However, before that, a question often asked by media persons relates to Afghanistan and whether the situation there has an effect on J&K.

The ripple effect of events in the Af-Pak invariably travels to the hotspots of the region, and J&K comes within that. Yet, when Afghanistan is quiet for some time, it gives the sponsors across the LoC the opportunity to actively involve themselves in affairs of J&K. Otherwise, internal security problems in Pakistan and events in Afghanistan allow the sponsors time enough only to keep the proverbial pot boiling in J&K.

The state government returned to Srinagar in the aftermath of the Handwara incident. Clearly, this was a manipulated event to test the new government but the follow up by the separatists fell through when the legitimacy of the allegations against the Army became doubtful. The separatists then attempted the ‘sainik colonies’ rumor as a fresh trigger. It was not passionately followed up either because of the tourist season now panning out and people in the streets wishing to be involved in their trade rather than in the protests. The government has been handling these issues quietly, just as it should. What is remarkably different is the maturity being shown by the political leaders in Jammu who are not reacting and responding to every provocation in the Valley.

The security situation is not yet worrisome but can get worse. There has definitely been a surge in infiltration. The contacts and gun battles reported in the last few days, and in fact ongoing even as of 27 May 2016, indicate the traditional areas being used for pushing in terrorists. The Army has been able to intercept quite a few. However, in the infiltration game, everyone understands that for every intercepted track, on an average two others successfully infiltrate. This means the strength in the hinterland is likely to increase, marginally, and some leaders would probably have been sent in to take charge of a few areas in North Kashmir. The Army has to ensure that it plugs the gaps in the counter-infiltration grid to prevent more leakages. It is likely that the anti-infiltration obstacle system (AIOS) has not been fully repaired as yet, although the low snow levels last winter did have a reduced damage effect on the AIOS than in previous years. In 2015, the grid was reinforced through some ad hoc measures. It always pays to use whatever resources available to stop the terrorists at the LoC itself.

So, while the tourist season keeps the separatists a little quieter and the Army is deeply involved in operations in the LoC belt the State Government has a window, a short one at that. It needs to shore up its demonstrated capability in administration and governance. That is the plank on which most governments get elected. It must focus on two or three key issues – such as distribution of flood compensation, for example – and ensure that it delivers. The Food and Supplies department must take it upon itself to ensure that there is no shortage of any commodity particularly milk, vegetables, petroleum products and cooking gas, in the coming winter. This should be taken up as a challenge.

J&K Chief Minister Mehbooba Mufti has already demonstrated that she has not forgotten the things she was briefed about before she was sworn in. She chaired a meeting on LoC trade very early into her tenure and gave some crunch decisions.

The second area that should engage the government’s attention is activating the information domain, an area that has been lying dead for long. A common platform should be evolved between the constituents of the coalition on the areas they would wish to be addressed in the public outreach. A return to the Kashmir Premier League cricket tournament by the Ministry of Sports and Youth affairs is strongly recommended. This tournament, which was played for two years under the aegis of the Army, needs to be revived. It had created a positive environment in the entire Valley. On a flimsy ground, the finance mandarins of the Ministry of Defence had shot down its continuation.

The last short term advice for the political leadership is: reactivate the grassroots contacts. J&K has, for far too long, been without grass root political activity that captivates people and keeps them pegged to local issues.

Nearly 5,000 Macy workers set to go on strike

Mark Witkowski & Philip Guelpa

On Thursday, May 19 nearly 5,000 New York area Macy’s employees, including those at the historic Herald Square store in Manhattan, voted to go on strike on June 15, when the current contract extension under which they are working runs out. Their contract officially expired on May 1.

The main issues are health care, pay, and work schedules according to a statement released by Local 1-S of the Retail, Wholesale and Department Store Union (RWDSU). The company is reportedly seeking to cut retirement benefits and to exclude certain job categories from coverage under the new contract.

One Macy’s sales employee who spoke with a WSWS reporter at the Herald Square store stated that the company is proposing to shift the cleaning of the store after hours to her department in order to reduce its cleaning staff.

For its part, a Macy’s spokesperson commented that, “Calls to strike by the union are an expected and standard part of the negotiation process." This cynical statement speaks to the choreographed collaboration between the trade unions and employers in seeking to impose concessions on workers.

On the day after the vote, RWDSU President Stuart Appelbaum stated, “The company cannot afford to undermine its workforce at a time when it faces greater competition from online retailers like Amazon.” This statement seeks to obscure the reality that, at a time when the economic crisis which erupted in 2008 continues to worsen around the world, corporations across the board, from auto to aerospace to telecommunications to retail, want to wrest concession after concession from their workers. The statement is also intended to present a false image to workers that the union is fighting for their interests.

The pattern of betrayals by the unions, including the RWDSU, is clear.

In June 2011, a strike at Macy’s in New York was averted at the last minute as the union agreed to a contract with scant wage increases which did not keep pace with the rapid rise in the cost of living in the already expensive metropolitan area. At the time, the agreement was hailed by the union president as a “solid contract.” The last time Macy’s workers in New York went on strike was in 1972.

Macy’s workers in San Francisco went on strike in 2004 but the union called off the strike after only one day. Several picketers were arrested for blocking the front door to the Macy’s in Union Square.

In recent years, retail businesses have been suffering substantial declines in revenue as workers’ purchasing power continues to contract. These companies are coming under tremendous pressure from Wall Street investors to savagely attack workers’ jobs, wages and benefits.

This trend is accelerating, with a number of companies either announcing large-scale store closings or going out of business altogether. This is resulting in mass layoffs and a drive to squeeze ever greater profits from the remaining employees under the threat that they could lose their jobs.

As is typical in the retail industry, the pay for Macy’s New York employees is abysmal, especially given the extraordinarily high cost of living in city. According to the website Glassdoor, the average hourly wages of a range of sales associate titles at Macy’s stores in the New York City area are approximately $9.00 per hour and benefits are limited. This is after the RWDSU’s 2011 “solid contract.”

Despite this, the business and corporate elites continue to reap lavish rewards. Last year, Macy’s chief executive, Terry Lundgren, received total compensation of $11.7 million, including $1.6 million in base salary and a range of perks.

Under these circumstances, it is a pernicious lie for union heads to claim that isolated struggles can defend, let alone advance workers’ interests. Workers can place absolutely no confidence in their union leadership, which will do everything in its power to impose another concessions-laden contract as quickly as possible, as is now being done by the CWA and IBEW in the Verizon strike.

There is a resurgence of the class struggle around the world, but at every turn unions and political leaders are attempting to suppress this development. Workers must break free from these organizations, form their own rank-and-file workplace committees and fight for a socialist program that unites workers internationally in a common struggle against the capitalist system.

Financial parasitism and the global housing crisis

Gabriel Black

Rent and housing costs in most major cities have skyrocketed since the financial crisis, cutting deeply into workers’ standard of living and prompting concerns about a new global housing bubble. Driving the soaring cost of rent is a global financial system that is being pumped full of cheap credit by all the major central governments at the expense of workers around the world.

Prices in some areas boggle the mind. San Francisco’s average asking price for a one-bedroom apartment went from $1,258 per month in January 2010 to $4,126 in February 2016. In London, the average home price has doubled since 2009, from about £300,000 ($437,600 USD) to £600,000 ($875,100).

Hong Kong’s housing market, which largely avoided the US real estate crash, more than tripled in its average sale between 2004 and today. The city is now considered the least affordable place in the world, with the median Hong Kong home price worth 19 times the city’s average skilled white-collar worker’s annual salary.

Housing and rental markets are so high that the Swiss bank UBS estimates that the majority of the world’s urban real estate markets are now “significantly overvalued.”

What is most striking about the colossal increase in prices, however, is how divorced it is from the incomes of the vast majority of the global population, which are moving in the opposite direction.

Historically, rent prices have tended to move with income and inflation. For example, in the United States the median home price adjusted for inflation remained largely flat between 1970 and 1998, fluctuating slightly above and below $160,000. This was a period in which workers’ incomes were also flat. After 1998, however, the housing market skyrocketed, with the median home price rising from about $160,000 in 1998 to $275,000 in 2006, the peak of the finance-driven boom. This jump was driven by all manner of financial speculation, including rampant criminal behavior, which had been let loose by the lowering of interest rates by the US Federal Reserve.

The housing market today is going through a new version of the 2006 housing crisis. However, unlike 2006, this process is global. Nearly every major capitalist government in the world is pursuing a policy of near-zero interest rates, encouraging rampant speculation in both the stock market and the real estate market.

This trend can be seen clearly in the United States. Between 2001 and 2014, the average real rental price rose 7 percent nationwide according to Harvard University’s Joint Center for Housing Studies. During that same period, median household income dropped by 9 percent.

In Los Angeles, the second largest city in the US, 40 percent of families either make poverty wages or are unemployed. As families and individuals increasingly struggle to make ends meet, rent has increased sharply in LA. In January 2010, an average one bedroom apartment went for $1,224 a month. Six years later, the cost was $1,935. And the worst is not over. A 2016 forecast by USC Casden Multifamily predicts that in the next few years rent will “soar.” It is no wonder that homeless in the city grew by 16 percent in just two years between 2013 and 2015.

Another way of capturing the growing divide between wages and rent for hundreds of millions of workers around the world is the Median Multiple, the ratio between median household income and average home price. According to the Demographia International Housing Affordability 2016 Survey, a Median Multiple of three and under is considered affordable (e.g., a family making $50,000 a year buying a house at $150,000 or less). A multiple exceeding five is considered “severely unaffordable.”

In 2015 Demographia surveyed 367 cities inside the UK, US, Canada, Australia, New Zealand, Ireland and Japan. According to the group, the 10 most unaffordable cities were: Hong Kong with a Median Multiple of 19.0; Sydney (12.2); Vancouver (10.8); Melbourne, (9.7); Auckland (9.7); San Jose (9.7); San Francisco (9.4); London (8.5); Los Angeles (8.1) and San Diego (8.1). All of these cities have experienced a doubling or even tripling of their Median Multiple since 1998.

The surge in prices and collapse in income has led to more renters on the renting market, since buying has become out of reach. In the United States, between 2005 and 2015, there were 9 million new renting households. This is the largest gain on record for a 10-year period according to Harvard University’s Joint Center for Housing Studies. In 2015, 37 percent of all US households rented, the highest level since the mid-1960s, and up from 31 percent in 2005.

Workers are now becoming trapped in this situation, as they spend more of their income paying for rent and are less and less likely to be able to buy a house. In 2001 in the US, 41 percent of renters spent 30 percent of their income or more on rent. This rose to 49 percent in 2014. In the same year, 26 percent of the renting population spent more than half of their income on rent. In the UK, a fifth of all young adults now stay in their parents’ home until they are at least 26. In 2015, 31.5 percent of US young people aged 18 to 34 lived at home, up from 27 percent in 2005.

While workers suffer under crushing rent burdens, landlords and investors are raking in millions if not billions. This year, a total of 184 billionaires made their wealth through real estate. This was up by 22 individuals from the year before, even as the overall number of billionaires went down from 1,826 to 1,810 individuals.

Those who make money off of rents do not add anything to the productive system. While a certain amount of money can go to maintenance and upkeep, vast and increasing sums of money made by real estate are from the pure monopoly status of owning land.

The wealth of these billionaires principally comes from the unsavory fact that in order to keep the global economy afloat, the central banks around the world have pumped the major banks full with cheap credit.

As UBS Global notes in its 2015 Global Real Estate Bubble Index, “Loose monetary policy has prevented a normalization of housing markets and encouraged local bubble risks to grow.” They write that much of the “overvaluation” in the global housing stock comes from a “dependence on low interest rates.”

“Price-to-rent (PR) multiples are greatest in Zurich, Vancouver, Hong Kong, Geneva and Singapore. The extremely high PR multiplies indicate an undue dependence of housing prices on low interest rates. Paris, London and Sydney follow suit and form a trio of cities with PR multiples around 30. House prices in these cities are vulnerable to a sharp correction should interest rates rise.”

In other words, the deluge of cheap credit provided by the world’s central governments to their major banks has unleashed an orgy of speculation. The world’s richest are getting even richer by doing nothing as their real estate investments shoot through the roof. Meanwhile the vast majority of the world’s population must pay increasingly obscene amounts just to have a place to live.

As Lenin noted in his work Imperialism, in capitalism’s state of decay there is an “extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by ‘clipping coupons’, who take no part in any enterprise whatever, whose profession is idleness.”

This describes exactly the parasitic layer of real estate moguls, whose money comes not from producing anything of value to the world economy, but by sucking away money from the system in the form of rent. There is no one who benefits from high rents except the small layer of people who control the vast majority of the world’s property.

Myanmar mine landslide leaves 14 dead, 200 missing

John Braddock

A landslide at a jade mine in northern Myanmar (formerly Burma) last week killed at least 14 people, with hundreds more buried by the collapsed hillside. The landslide in Kachin state on the night of May 23 came after several days of heavy rainfall. One week after the tragedy there has been no official confirmation of the final numbers of dead and injured. As many as 200 workers remain missing.

According to the Myanmar Times, the disaster occurred around 8:15 p.m. at a site owned by Yadanar Star Company. The company had ceased operations for the day due to the bad weather, but hundreds of so-called hand pickers, who scour the excavation site for leftover jade deposits, moved in to work over the tailings. One witness said there was a creek flowing down the middle of the workings, displacing soil from the hill.

Administrators, police, a funeral service team, aid workers and the fire brigade worked with company backhoes to clear the slide until the search was called off due to heavy rain and the continuing threat of landslides.

U Kyaw Myint, a local resident, said: “We collected the dead and the injured from the top part of the slide. We could not retrieve bodies from the bottom of the slide. If we tried to remove them, the land from above would collapse again.” Hundreds of hand pickers were still working on the tailings the following day, despite continuing downpours.

In an attempt to divert attention away from the responsibility of Myanmar’s government, Hmawe Gyi, a member of the ruling National League for Democracy (NLD) party, criticised the company for hampering the recovery operation. “Jade mine companies should use machinery and cooperate with authorities to search for the missing people,” he said. “Now, people don’t know if their family members are dead or not.”

The remote region has little phone coverage and poor roads. The absence of these, underdevelopment and miserable and dangerous working conditions are not due to a lack of money. Jade is an expensive and sought-after gemstone. Hpakant, which lies 651 kilometres (404 miles) north of Myanmar’s capital Naypyidaw, is the site of the world’s biggest mine and produces some of the highest-quality jade. Much of it is exported or smuggled to China.

Global Witness reported last October that jade valued at a staggering $US31 billion (£20 billion) was extracted from the mines in 2014. This sum, theGuardian noted, equated to nearly half the country’s gross domestic product and over 46 times current spending on health. The total jade output for the past decade was estimated at $120 billion.

According to Irrawaddy, over 620 mining companies operate in the Hpakant and Lone Kin regions. An estimated 300,000 workers toil under conditions of terrible exploitation and extreme poverty. Enormous undocumented profits are seized by a small and corrupt elite, mostly hidden license holders linked to the Myanmar military.

All the main mining companies identified by Global Witness are either directly owned by army officers, or operated by those with close ties to them. Spokesman Mike Davis told the BBC: “These families are making extraordinary sums of money, often in the tens and hundreds of millions of dollars.” Companies connected to the family of retired general Than Shwe, the former military ruler, allegedly made more than $220 million in jade sales in 2013 and 2014.

Between 1992 and 2011, Than Shwe presided over a military dictatorship that brutally suppressed demonstrations and strikes, and imprisoned opponents. From 2009 the military junta opened up pro-market reforms by privatising assets and allowing the establishment of private banks. But it ensured that the state assets largely ended up in the hands of the military or its associates.

In the past year, dozens of mine workers have been maimed or killed picking through waste dumps. The worst disaster occurred last November when 113 miners were killed and 100 left missing when a 60-metre mountain of earth and waste collapsed, burying the makeshift huts where the miners slept. The activities of 12 companies were briefly suspended after the incident.

Another landslide hit the Hpakant area on December 25, leaving as many as 50 people missing. The exact death toll in this incident, as in many others, has remained undetermined. On January 25, mines run by the Yadana Yaung Chi, Yadana Adipati and Myitsone Ayeyar companies suffered two landslides, while 100 prospectors were looking for jade, killing at least 30. The deputy minister of mines, Than Tun Aung, responded with threats to prosecute the “illegal” miners, “large and small.”

On May 5, a slag heap at a mine run by Yadanar San Shwe Company and Triple One Company collapsed. Sai Nyunt Lwin of the Hpakant hospital said 13 bodies were brought in from Seng Tawng mining village. Aung Ram, who lost eight family members in the accident, said: “This happens all the time and now it has come to my relatives. We cannot do anything except to pray for their souls and we don’t even know who to blame.”

Civil rights groups routinely criticise the mining companies for the social and environmental impacts of the unregulated industry. Locals have led protests against the companies in recent months to try to pressure them to improve the safety of excavation areas. Early this month, civil society organisations in Kachin state demanded that the government form a commission to inspect mines that have violated industry regulations.

New safety measures have been promised, but the NLD and its leader Aung San Suu Kyi, which won last November’s election, are not about to cut across the interests of the military and its business empires. In the name of “national reconciliation,” a power-sharing arrangement has been agreed, ensuring that the military’s position and privileges are protected.

While the NLD may stimulate business opportunities for entrepreneurs previously sidelined by the army, both factions of the ruling elite intend to accelerate the opening up of Myanmar to foreign capital, and bring the country’s foreign policy into line with Washington’s so-called pivot to Asia, directed against China. This means savage economic restructuring, cuts to public spending, privatisation of state assets and continuing deaths and exploitation in mining and other industries, as the NLD seeks to turn the country into a new cheap labour platform.

US uses gas deliveries to pressure Russia

Clara Weiss

While NATO is encircling Russia militarily, the energy market is increasingly being used to exert pressure on Russia for geostrategic aims. Recently, the US undertook two significant steps in this direction. With the beginning of liquid gas (LNG) exports to Europe, the United States has stepped up a price war against the Russian gas monopolist Gazprom. At the same time, the US government is openly intervening to prevent the extension of the German-Russian gas pipeline Nord Stream.

In late April, the first LNG units from the US were delivered to the Portuguese port of Sines. The delivery was meant not least as a symbolic move. The EU is currently importing on average about one third of its gas from Russia, but in several member states the percentage is significantly higher.

As of 2013, Finland, Poland, Slovakia, the Czech Republic and Hungary were importing well over 80 percent of their gas from Russia, and Austria and Greece over 60 percent. Germany imports about a fifth of its gas from Russia, but in quantity it is the largest importer. Overall, 90 percent of EU gas imports are covered with natural gas.

The American company Cherniere, which is delivering the LNG, has struck long-term contracts with several European companies, among them Galp (Portugal), the Dutch-British Royal Dutch Shell and the Spanish Gas Natural. It has not been made public exactly how much gas these companies will buy.

The LNG deliveries serve to put pressure on the European gas price and thus pressure the Russian state company Gazprom. As one analyst from the French bank Société Générale explained to the Wall Street Journal, the deliveries signify “the start of the price war between US LNG and pipeline gas.” In February, a Gazprom representative already announced that the company would lower production costs in the case of American LNG deliveries to Europe.

Over the past few years, Russia’s position on the world market as a major supplier of energy has been already significantly weakened. Just a few years ago, the United States was the world’s largest importer of gas. However, due to the development of fracking technology, the United States could start producing shale gas and oil on a mass scale. In 2009, the US thus became the world’s largest gas producer, overtaking Russia. The US is now importing less than 5 percent of its gas consumption.

Under these conditions, a bitter price competition has emerged between Europe’s two largest gas suppliers, Russia’s Gaszprom and Norwegian Statoil. The United States has now entered that competition. In order to maintain its market share, Gazprom has been forced to dramatically lower its gas prices in recent years.

In March 2016, the average price for Russian gas in Europe was only $147.2 per 1,000 cubic meters, 56 percent less than in March 2015. According to the Moscow Higher School of Economics, Gazprom was forced to renegotiate contracts with 30 of its European clients 65 times in the past few years.

A 2014 study by the Center on Global Energy Policy at the Columbia University in New York makes clear that the US is pursuing political goals with its LNG deliveries. It noted: “The US shale gas boom has already helped European consumers and hurt Russian producers by expanding global gas supply and freeing up liquefied natural gas (LNG) shipments previously planned for the US market. This has strengthened Europe’s bargaining position, forcing contract renegotiations and lowering gas prices. US LNG exports will have a similar effect.”

The study stated that those deliveries were “unlikely to be significant enough to prompt a change in Moscow’s foreign policy, particularly in the next few years.” Nevertheless, the study calculated that the economic impact on Russia would be significant. Deliveries of 9 billion cubic meters per year would result in a lowering of Russian annual gas revenues by $24 billion, or 27 percent. If deliveries reach 18 billion cubic meters, the losses would amount to $33 billion, or 38 percent of annual gas revenues. This would be equivalent to 1.1 percent of Russian gross domestic product (GDP).

The strategists of US imperialism have made out the energy sector as the Achilles heel of the Russian economy. Thanks to rapidly rising oil and gas prices, Russian GDP grew by more than five times between 2000 and 2008, despite a stagnation in the manufacturing sector. The collapse of oil prices in 2008 and the strong dependence of the Russian budget on revenues from energy exports led to a dramatic decline of Russian GDP. This is why the economic sanctions and the energy policy of the United States since the Ukraine crisis are primarily directed at Russia’s energy sector.

A central component of this policy is to lower the Russian share of the European energy market. The US is therefore supporting pipeline projects that are supposed to deliver gas from Central Asia and the Caspian Sea to Europe by circumventing Russia. Among them are the Trans Anatolian Pipeline (TANAP) and the Trans Adriatic Pipeline (TAP) that will transport gas from Azerbaijan over Georgia and Turkey to Greece, Albania and Southern Italy.

Ukraine occupies a key role in this strategy. Prior to the coup in Kiev in February 2014, Ukraine imported 90 percent of its gas from Russia, and about half of Russia’s gas deliveries to Europe were transported through the country. Now, the situation has changed radically.

Despite massive financial problems and extreme poverty, the Ukrainian government has spent hundreds of millions of euros to transport gas from Europe, instead of Russia, and thus lower its dependence upon the latter. The International Monetary Fund (IMF) and the European Bank for Reconstruction and Development (EBRD) supported this policy by extending large credits to the Kiev government.

In this way, by 2015 Ukraine had doubled its gas imports from Europe to 10.3 billion cubic meters, according to Natural Gas Europe. At the same time, the imports directly from Russia were drastically reduced by almost two thirds, to just 6.1 billion cubic meters. Since the winter of 2015/16 Ukraine has not been importing gas from Russia at all. Gazprom has thus lost one of its most important sales markets.

With this energy war against Russia the US and the EU are pursuing two aims: First, its goal is to help force the Kremlin to change its foreign policy and open up its energy sector for Western companies and investors. Second, it is aimed at preparing the grounds for a war against Russia in Europe on an economic level.

This is necessary because precisely those Eastern European NATO-member states that are pushing for a military confrontation with Russia are also the most reliant upon Russian gas deliveries. The United States and sections of the European bourgeoisie regard this as a serious obstacle to consistently pro-Western policies of these countries (for example Hungary) and as a weak spot in case of war. For instance, a sudden stop of Russian energy supplies would hit the economy of the Baltic States hard.

In December 2015, a study by the US Army College warned about the implications of the Ukraine crisis for European energy security and recommended the US army prepare the military protection of central energy infrastructure in Europe, including pipelines and underground gas storage facilities.

The sharp conflicts over the expansion of the German-Russian gas pipeline Nord Stream must be seen within this context. The US and several Eastern European countries, above all Poland and the Baltic states, fear that the pipeline could become the basis for a German-Russian axis, first in economic and then foreign policy. If built, Nord Stream 2 would significantly lower the gas transit via Slovakia, Poland and Ukraine. Meanwhile, Germany could further strengthen its position as a central energy hub in Europe.

In early May, the US government publicly spoke out against the pipeline. During an US-EU energy conference, Secretary of State John Kerry said that the Nord Stream 2 would have “very negative implications” for Eastern Europe. Amos Hochstein, the US special envoy and coordinator for foreign policy issues, stated that the US was “deeply concerned” about the pipeline.

By contrast, the German government argues that Nord Stream 2 is nothing but a “commercial project” and therefore a matter of concern only for the companies involved. These include, alongside Gazprom, the German companies Wintershall and E.On, as well as the Austrian OMV and the French Engie.

The German government’s position is opposed not only in Washington, but by much of the EU as well. Unlike the German government, the EU commission in Brussels regards the project as a threat to European energy security and gas supplies to Eastern and Central Europe.

The countries of the Visegrad Group (Poland, Ukraine, Slovakia and the Czech Republic) have demanded a legal review of the pipeline. Italy is also a strong opponent of the project. In the German bourgeoisie there is growing opposition. Thus, the head of the conservative faction within the EU parliament, Manfred Weber (CDU), sharply criticized the project in a letter to EU energy commissar Miguel Arias Cañete, while the German economic minister, Sigmar Gabriel, argued that it would undermine the energy and security goals of the EU and strengthen the position of Gazprom.

Over 700 refugees drown in Mediterranean shipwrecks

Laura Tiernan

More than 700 refugees have drowned in the Mediterranean Sea since Wednesday attempting to reach Europe from Libya. It is the single deadliest week for refugee drownings this year, according to the United Nations refugee agency, the UNHCR.

Three shipwrecks in just three days account for most of the week’s enormous death toll. Other agencies, including Médecins Sans Frontières (MSN), have estimated more than 900 deaths. “We will never know exact numbers,” MSN tweeted on Sunday, “Around 900 people may have died in the Central Mediterranean in the last week alone. Europe, this is unbearable.”

Carlotta Sami, a spokesperson for the UNHCR, has confirmed an estimated 100 people are missing after an unseaworthy vessel capsized on Wednesday. Horrifying images of the boat tipping over, with hundreds of terrified asylum seekers thrown into the sea, were captured on video by the Italian Navy.

Sami told the Associated Press that another 550 people are feared dead after another boat carrying refugees capsized the next day. The vessel reportedly left the Libyan port of Sabratha on Wednesday, with 670 refugees on board.

A third shipwreck occurred on Friday, during which 135 people were rescued and at least 45 bodies were recovered—taking the overall death toll to 700. But refugees who survived the incident say many more are missing.

The shipwrecks account for the largest loss of life in the Mediterranean since April 2015, when a single boat capsized killing 800 people trapped inside.

The death of hundreds of refugees in the Mediterranean is not only a tragedy, it is a crime. The governments in the US, Germany, Greece, Italy and other European countries, as well as the European Union, bear principal responsibility.

The numbers of asylum seekers fleeing to Europe in unseaworthy vessels is increasing due to vicious anti-migrant controls that have blocked routes to Europe via the Balkans. This includes the deal reached in March with Turkey creating a “Fortress Europe,” aimed at cutting off lifelines to those fleeing wars conducted by the European powers and the United States that have devastated entire countries throughout the Middle East and North Africa.

As a result, according to Italian authorities, the number of refugees rescued this week reached 13,000. On Saturday alone, a flotilla of ships saved 668 people from boats off the southern coast. Last week, over 4,000 migrants were rescued at sea in just one day.

The UNHCR’s update provided new information about Thursday’s deadliest sinking. Initial reports only took into account the missing and dead from a smaller, powered boat. Sami told AFP that the refugees rescued from the smaller vessel said the boat that sank did not have an engine and was being towed by another equally packed smuggling boat before it capsized.

AFP reports that Italian police corroborated the UN account, based on their own interviews with survivors, though the numbers cited do not precisely tally. According to survivors, the boat “started taking on water after about eight hours of navigation.” An attempt to bail it out “with a line of migrants passing a few five-litre bailing cans” failed:

“At that point, the commander of the first smuggler’s boat ordered the tow rope to be cut to the sinking boat. The migrants on the top deck jumped into the sea, while those below deck, estimated at 300, sank with the ship, police said. Of those who jumped into the sea, just 90 were rescued.”

Giovanna Di Benedetto, a spokeswoman for Save the Children, said, “There were many women and children on board. We collected testimony from several of those rescued from both boats. They all say they saw the same thing.”

The Independent reports a Libyan naval spokesman, Col. Ayoub Gassim, saying its own coastguard had rescued 766 refugees in two operations that took place on Thursday. They were found in two groups: 550 near the western coast city of Sabratha and another 216 off the coastal city of Zwara. Gassim said two boats were also found empty in the area between the two Libyan cities, and only four bodies had been retrieved. The death toll is unknown.

There are sinister and unanswered questions over the role of the military in the tragic events of the past week.

As part of “Operation Sophia,” a massive military mobilisation involving fourteen European countries has been underway for the past year. Warships, submarines, aircraft, helicopter gunships and drones have been deployed by European powers, including Germany, Italy, Spain, France, Britain, Greece, the Netherlands and Sweden. The headquarters of the mission is located at a military airport in Rome.

According to media reports over the weekend, military aircraft first saw the vessel (which subsequently sank on Thursday) in trouble around 35 nautical miles off the coast of Libya. Yet little was done in response. EU officials said a second helicopter “arrived on the scene Thursday and threw life jackets into the water.”

The purpose of Operation Sophia is to strengthen “Fortress Europe” to ward off refugees, while preparing a new military intervention in North Africa under the guise of fighting the ‘causes’ of refugee crisis.

On Friday, UK Prime Minister David Cameron, once again confirmed this analysis. Speaking at the G7 summit, he praised the EU-Turkey agreement to deport asylum seekers from Greece. He declared, “In the eastern Mediterranean, on average nearly 2,000 people arrived this way per day before the EU-Turkey deal was signed. Since then, it’s fewer than 100. It’s still a fragile agreement—but returning people works. Now we need to do the same with the central Mediterranean route.”

Cameron also declared that the European powers “are working to agree a plan to boost the capability of the Libyan coastguard.” Then he announced: “Once a detailed plan has been agreed with the Libyan authorities, the UK will send a UK training team to assist in its implementation. And once the relevant permissions and UN Security Council Resolution are in place, I will deploy a naval warship to the south central Mediterranean to combat arms trafficking in the region.”

The danger of nuclear war between the US and China

Peter Symonds

Last week’s G7 summit in Japan was dominated by two interconnected issues: the deepening crisis of global capitalism and the drive to war, in particular the growing danger of a clash between China and the United States in the South China Sea. The inability of the major powers to offer the slightest resolution of the economic breakdown is fuelling national antagonisms and the slide toward conflict.

The US and Japan pressed hard at the G7 gathering for a strong communiqué critical of China that would justify the ramping up of provocative American military incursions within the 12-nautical-mile territorial limit around Chinese-claimed islets. Earlier this month, the US navy conducted a third so-called “freedom of navigation” operation near Fiery Cross Reef in the South China Sea, producing an angry reaction from Beijing and declarations that it would beef up its defences in the area.

In the campaigns currently underway for the US presidency and the Australian federal election, a conspiracy of silence reigns over the preparations for war, aimed at deadening the consciousness of the population to the rising danger of nuclear conflict. Two nuclear-armed powers are facing off not only in the South China Sea, but other dangerous flashpoints such as North Korea and Taiwan, each of which has been greatly exacerbated by Washington’s “pivot to Asia” and aggressive military build-up throughout the region.

An arms race is underway that finds its most acute expression in the arena of nuclear weaponry, delivery systems and associated technologies. Determined to maintain its supremacy in Asia and globally, the US is planning to spend $1 trillion over the next three decades to develop a broader range of sophisticated nuclear weapons and means for delivering them to their targets. The unstated aim of the Pentagon is to secure nuclear primacy—that is, the means for obliterating China’s nuclear arsenal and thus its ability to mount a counter attack. The Chinese response, which is just as reactionary, is to ensure it retains the ability to strike back in a manner that would kill tens of millions in the United States.

The reality of these dangers was underscored last week by the release of a report by the US-based Union of Concerned Scientists (UCS). It chillingly warned:

“Twenty-four hours a day, 365 days a year, the governments of the United States and the People’s Republic of China are a few poor decisions away from starting a war that could escalate rapidly and end in a nuclear exchange. Mismatched perceptions increase both the possibility of war and the likelihood it will result in the use of nuclear weapons. Miscommunication or misunderstanding could spark a conflict that both governments may find difficult to stop.”

While appealing for the two sides to acknowledge the risks and heighten diplomatic efforts to prevent conflict, the UCS analysis offered not the slightest hope that such steps would be taken. The report bleakly declared:

“Lack of mutual trust and a growing sense that their differences may be irreconcilable incline both governments to continue looking for military solutions—for new means of coercion that help them feel more secure. Establishing the trust needed to have confidence in diplomatic resolutions to the disagreements, animosities, and suspicions that have troubled leaders of the United States and the PRC [China] for almost 70 years is extremely difficult when both governments take every effort to up the technological ante as an act of bad faith.”

The intensifying military competition is an unequal one, which only heightens tensions and the danger of war. In the field of nuclear armaments, China is outgunned and outnumbered. While desperately seeking to catch up, the Chinese military is generations behind in the capability of its weaponry and fields an estimated 260 warheads, compared to about 7,000 for the US. Its prime objective is to ensure a credible nuclear deterrent would survive a US first strike. Unlike Beijing, Washington has never ruled out the first use of nuclear weapons.

The Guardian reported last week that China is poised to send submarines armed with nuclear weapons on patrol in the Pacific for the first time. Such a move signals a break with the current policy, under which warheads and missiles were stored separately under the strict control of the top leadership. Armed missiles will now be loaded onto nuclear submarines to enable their immediate launch against continental America in the event of war.

The Chinese leadership has been driven to such measures by the US military build-up in North East Asia, especially the deployment of anti-ballistic missile systems aimed at neutralising China’s ability to strike back. China’s nuclear submarines, however, are comparatively noisy, making them vulnerable to detection and destruction by US attack subs. A new scenario is unfolding in which a jittery Chinese commander could misunderstand an order and, fearing imminent attack, unleash the submarine’s missiles against pre-determined targets.

Nuclear war will not be averted through the diplomacy of major powers, worthless posturing about international nuclear disarmament or the vain hope that nuclear war is so terrible as to be unthinkable. Nuclear strategists have been “thinking the unthinkable” for more than half a century. The last world war ended with the atom bombing of Hiroshima and Nagasaki, killing some 200,000 people. President Barack Obama’s refusal last week in Hiroshima to offer an apology for those monstrous crimes of US imperialism is a sure sign that new ones are being prepared.

The relentless drive toward a new world war between nuclear-armed combatants stems from the crisis of capitalism and its irresolvable contradictions. Only the working class can end the danger of war by putting an end to the profit system and its outmoded nation state system. That is the significance of the struggle being waged by the International Committee of the Fourth International and all its sections to build a unified anti-war movement of the international working class based on the perspective of socialist internationalism.

Terrorist arrests injected into Australian election

Mike Head

Ongoing arrests by the Australian Federal Police (AFP) have led to inflammatory government warnings of terrorist plots, and sensationalised headlines about “radical Islamist-inspired violence,” in the campaign for the July 2 double dissolution election.

The latest occurred yesterday. Police announced that a man, 25, was detained in Melbourne’s northwest on suspicion of offences relating to five men arrested on May 10, accused of trying to travel to Syria to join Islamic State (ISIS). No further details were provided.

Many questions are raised about the timing of each arrest, suggesting definite political calculations. The Liberal-National government, with Labor’s bipartisan backing, is again resorting to terrorist scares to divert attention from the deepening economic and social problems affecting millions of working people.

Attorney-General George Brandis seized on the arrests to declare that the threat of terrorist acts remained “real and present.” As well as seeking to whip up an atmosphere of fear, Brandis’s comments insinuated that those arrested were all guilty—even though they have yet to face trial—violating the legal presumption of innocence.

However, as the cases reveal, the police detentions are based on threadbare evidence and dubious charges.

Farhad Said, 24, who was arrested outside his Bankstown home on Thursday, was charged for alleged involvement in supposed 2014 plots to attack Sydney’s Garden Island Naval Base and AFP headquarters. The AFP said it expected to charge him with conspiracy to conduct an act in preparation for a terrorist act.

Such vague “conspiracy” charges, exploiting the draconian anti-terrorism laws introduced since 2001, permit people to be arrested and, if convicted, sentenced to life imprisonment, for allegedly “preparing,” “assisting” or “facilitating” an unspecified terrorist act.

According to media reports, fed by the police, Said is alleged to have been involved in preparing handwritten notes that police seized during raids across Sydney in December 2014. The AFP offered no explanation for why his arrest was made 18 months later while saying he posed no immediate threat to the public.

The Sydney Daily Telegraph, a Murdoch tabloid, reported that Said’s arrest was believed to relate to an alleged planned attack by Sulayman Khalid. Khalid was detained in December 2014, charged with possessing documents connected with the preparation for an unspecified terrorist act. He was due to stand trial last November, but this was postponed.

Last week, police carried out raids on eight homes across Melbourne connected to five men arrested in Cairns on May 10 and accused of planning to travel to Syria to ISIS, starting with a motorboat trip from northern Australia to Indonesia.

The men, aged between 21 and 31, all previously had their passports cancelled by the government. They were charged with preparing to enter a foreign country “for the purpose of engaging in hostile activities,” an offence that can mean life imprisonment. The five were detained after towing a small (seven-metre) boat from Melbourne to Cairns.

Towing a boat is not a crime, yet police commanders claimed that the long road trip over several weeks showed the men were “incredibly committed” to joining the fighting in Syria. Again, there was no explanation for the timing of the arrests. AFP assistant commissioner Neil Gaughan said the men had been under investigation for “a number of weeks.”

While the police officially did not disclose the five men’s identities, the media was full of allegations that they included a “notorious Islamic preacher” and a brother of a “hardline Islamist preacher.” Attorney-General Brandis fuelled the claims, saying it was the first attempt to leave Australia by vessel of which authorities were aware, but “I can’t rule out the possibility that there may be others.”

Under the “foreign fighters” legislation, the Australian foreign minister can, by executive decree, deem parts of the Middle East “declared areas” because a “listed terrorist organisation” is “engaging in a hostile activity” there. The criminal law onus on the police to prove that a trip is illegal is also reversed. An accused person must show that an intended trip was solely for a recognised “legitimate” purpose, such as a family visit.

Last week’s arrest of Tamim Khaja, 18, in Sydney points again to the role of police undercover agents in enticing vulnerable Islamic teenagers into making statements or taking steps that are used to arrest them. He became the second teenager to be entrapped by a police provocateur in recent weeks.

Under police surveillance for more than a year, Khaja was invited by a disguised police agent to buy a gun. He was promptly arrested for allegedly planning to obtain a weapon to commit a terrorist act, possibly targeting public buildings in Sydney. The police claimed his attack was “probably imminent,” although he had not decided on a location.

Following Khaja’s first court mention last week, his lawyer, Osman Samin, urged the public to recognise the principle of “the presumption of innocence.” That was after the police effectively declared Khaja guilty.

AFP Deputy Commissioner Neil Gaughan stated: “This young person’s life changed today. When he made those decisions he took two weeks ago, he’s now looking at life in prison.”

New South Wales Deputy Police Commissioner Catherine Burn boasted that Khaja’s arrest was the direct result of police involvement with the teenager, who was “known to police for some time.” Burn added: “We have been doing particular things with him. Today it’s culminated in his arrest.”

Earlier this month, evidence emerged that a 16-year-old boy arrested in Sydney on April 24—the eve of the annual Anzac Day war commemorations—was also a victim of police entrapment. In conversations on a social networking app, an undercover agent posing as an overseas Islamist persuaded or provoked him into saying he wanted to obtain a firearm and learn how to make a bomb.

Police entrapment is becoming endemic in Australia and internationally, generating sensational allegations of planned terrorist attacks. These scare campaigns are used to justify an increasing assault on basic legal and democratic rights.

This is an escalating offensive. As the Socialist Equality Party election statement warns: “For 15 years, Labor and Liberal governments, with the collaboration of the media, have manufactured terrorist scares and incidents as the pretext for handing draconian powers to the intelligence agencies and police to detain and interrogate ‘suspects’ without charge and conduct rampant surveillance and spying.”

Australian media vendetta against worker who questioned tax breaks for wealthy

Patrick Kelly

The beginning of the Australian election campaign this month coincided with a vicious media attack on a vulnerable minimum-wage worker who dared challenge the government’s tax breaks for the wealthy on ABC television’s “Q&A” current affairs program.

Duncan Storrar was one of the selected audience members on the May 9 program who asked a question to the panel, which included the Liberal-National government’s Assistant Treasurer Kelly O’Dwyer.

Storrar, it later emerged, is a 45-year-old living in public housing with his partner in Geelong, a Victorian regional city that has been hard hit by several decades of deindustrialisation. He works part-time as a truck driver, earning $16 an hour, while also receiving a $520-a-fortnight Austudy allowance.

“I’ve got a disability and a low education, that means I’ve spent my whole life working for minimum wage,” Storrar began. Referring to changes to the tax structure in the government’s budget to benefit a wealthier layer, he continued: “You’re going to lift the tax-free threshold for rich people. If you lift my tax-free threshold, that changes my life. That means that I get to say to my little girls, ‘Daddy’s not broke this weekend. We can go to the pictures.’ … Rich people don’t even notice their tax-free threshold lift. Why don’t I get it? Why do they get it?”

O’Dwyer replied with barely concealed contempt. “The critical thing here is that we actually need to grow the pie,” she declared, deriding any suggestion of moving to redistribute the pie to benefit the less well off. She went on to boast of the government’s pro-business measures and cited the example of a café owner being given a tax break that allowed the purchase of a “$6,000 toaster” to boost profits.

The assistant treasurer was backed by another “Q&A” panellist, Innes Willox, head of the big business lobby the Australian Industry Group. Willox declared, “Duncan, I'll be harsh in my message. If you’re on the minimum wage and with a family, you would not pay much tax, if any at all. Would you? You would not pay much tax.”

Storrar stood his ground, answering that he paid tax every time he drove his car and shopped for groceries at the supermarket—a reference to the 10 percent goods and services tax (GST) and other indirect taxes.

Storrar’s questions immediately resonated among ordinary people. His remarks received loud applause from the “Q&A” audience, while social media responded with a popular #IStandWithDuncan hashtag. Deriding O’Dwyer’s defence of government policy, one person set up a crowdfunding website page to buy Duncan a $6,000 toaster. In just over two weeks, ten times that amount was collected, with $60,051 raised from donations from nearly 2,500 people.

Storrar’s intervention on “Q&A” made a significant impact because it provided a rare glimpse, albeit limited and brief, into the harsh reality of everyday life for millions of people in Australian society today. Numerous statements on social media, in letters to newspapers, and on radio call-in shows were made by people explaining their own struggles with raising a family on low incomes.

The major parties have no real policy differences on such matters, with Labor and Liberal both representing the interests of finance capital and the ultra-wealthy. The Greens occasionally posture as opponents of the banks and big business, while representing an affluent upper-middle class constituency and manoeuvring for a ruling coalition with either of the major parties.

The working class is effectively disenfranchised and excluded from any involvement in parliamentary politics. Just as a federal election campaign began, Storrar’s question on “Q&A” threatened to provide an opening for a broader discussion of poverty and social inequality—unmentionable issues as far as the political and media establishment are concerned.

As a result, Storrar was made the target of an extraordinary media campaign, aimed at discrediting if not outright destroying the individual.

The Murdoch press was at the forefront. Both the Australian and the Herald Sun devoted substantial resources to probing Storrar’s employment and taxation situation. After dredging through his private life, both newspapers ran front-page stories on Storrar’s past criminal record. The Herald Sun ’s headline was, “ABC Hero a Villain: Q&A sob story star exposed as a thug as public donate $60,000”. The Australian ran another front-page story featuring an interview with Storrar’s estranged son, who denounced his father as a drug user. Yet more stories accused him of being a “deadbeat dad.”

This media filth continued even after Storrar fled his home, pleading for his family to be left alone, and explaining that he suffers post-traumatic stress disorder from childhood sexual abuse.

In what amounted to a thinly-veiled threat to any other working class people thinking about challenging the government, the Herald Sun’s editor Damon Johnston declared: “If you put yourself on the public stage, and in, particularly in the middle of an election campaign, questioning government policy, questioning this, I think that you’re entitled to be subjected to a bit of scrutiny. It was all part of legitimate public debate in my view.”

Storrar responded with dignity, issuing a public statement via the ABC’s “Media Watch.” He began by explaining that he saw the main “lesson for Australia in this episode” to be that if anyone shows that “the powers-that-be [are the] out of touch people that they are, they will be dropped, probed and attacked in any way with no thought to the mental wellbeing of their children.”

He added: “My [‘Q&A’] question is still valid and hasn’t been answered, but more to the point there are a whole class of people out there, yes we might have records, yes we might not be perfect but society has forgotten us, the politicians and the media use us whenever they want to show why they need to be elected, but never do anything to help our plight. We are breaking down here and life hasn’t been this hard since before Whitlam for the underclass.”

The Storrar episode is a warning to workers. The savage media treatment of an individual who dared to ask a question about government policy is nothing but a reflection of the ruling elite’s ruthless determination to prevent any challenge to the status quo. There is no longer any constituency for democratic rights within the political establishment—when the capitalist class is confronted with a threat to its property and wealth, it will use every means at its disposal, including outright repression, to try to silence and suppress the working class.

UK White Paper escalates privatisation of higher education

Joe Mount

Britain’s Conservative government is pushing through major attacks on universities as part of the drive to privatize the entire education system.

The attacks were part of the Queen’s Speech announcing Tory plans “to support the establishment of new universities and to promote choice and competition across the higher education sector.” They are contained in a White Paper detailing changes to the higher education (HE) system that, if enacted into law, would fundamentally change the social role of universities and allow private institutions to be given university status.

The main proposals are further counter-reforms that remove any remaining barriers to profit making and facilitate the establishment of private universities. New, for-profit institutions will be able award degrees immediately and earn university status after three years of operation, benefiting numerous niche private institutions.

The White Paper, “Success as a Knowledge Economy,” denies support to the many universities that struggle financially and explicitly rejects bailouts. If struggling, they would face course closures or complete collapse, creating a gap in the market for new colleges. The new universities are given a license to exploit the lucrative “education export market” with courses, mainly in business and high-paying professions, targeting overseas students who pay astronomical fees averaging £12,000 per year and reaching £36,600 for medicine courses.

The government claims the reforms will improve the accessibility and “relevance” of universities. Background notes to the Queen’s Speech boasted of “the biggest supply-side reforms to the higher education sector for a quarter of a century, so that we open more universities and give more young people—from all backgrounds—the chance to succeed.” In reality, it increases the subordination of the HE system to a growing “market” in education, with institutions competing against one other. Far from increasing access to education for all, this can only decrease it and exacerbate social inequality.

The second plank of the paper breaks the link between teaching and research. Under the banner of “diversity,” the HE system will reflect entrenched social inequality, with a range of institutions charging different amounts according to market rates. This will further the proliferation of low-status, teaching-only institutions catering to working class youth while a core of elite universities monopolise scarce research funding. Newly founded universities will offer cut-price courses with shorter duration and lower educational standards, while the rich buy their children a world-class education.

Research resources are to be further subordinated to business interests, with increased focus on Science, Technology, Engineering and Mathematics (STEM) subjects. The government’s agenda is revealed by the appointment of John Kingman, a former treasury secretary and banker, to run the new unified research funding body “intended to improve Britain’s record of turning knowledge into cash.”

The changes will worsen students’ financial burden and education quality.

The Tories’ planned Teaching Excellence Framework (TEF) is effectively a league table that will intensify competition and encourage the commodification of education. Universities that fulfil “teaching quality” criteria will be allowed to increase tuition fees to keep up with inflation, which will mean £10,000 in standard annual fees within the decade. Various existing fee caps will be lifted, enabling more institutions to charge the present full figure of £9,000 per year. The TEF will become a mechanism to increase academics’ teaching workload.

The Tories’ claims that the measures are aimed at increasing social mobility are exposed by the fact that the universities most likely to fail are former-polytechnics in poor areas that teach the most youth from disadvantaged backgrounds. Graduates typically pursue lower-paid jobs in health care and public services. Prior to its latest raft of attacks, the government abolished maintenance grants that assisted with the living expenses of the poorest students.

The number of mature and part-time students has also fallen rapidly.

The HE proposals will cement Britain’s status as the country with the most corporate-dominated education system, with lower HE spending than any other developed country. Britain now has the world’s highest levels of student debt and worst bursaries provision, according to the “Degrees of Debt” study by the educational charity Sutton Trust, which concluded:

“The typical English student faces debts of over £44,000 at graduation. Even compared with graduates of US private for-profit universities (who graduate with about £29,000 of debt), estimates suggest that English students fare worst.”

Funding constraints have tightened since the 2010 tripling of tuition fees and associated cuts by the incoming Conservative/Liberal Democrat coalition, forcing universities to rely on fees and placing the financial burden onto the backs of students. The impact on teaching quality was confirmed by a recent leaked government memo admitting universities “do not offer the quality and intensity of teaching we expect for 9k.”

HE is being transformed into a competitive market by spending cuts, sky-high fees and the rapid proliferation of private universities. Hundreds of private institutions are now able to adopt the prestigious “university” title, award official degrees and issue state-backed student loans. Market competition has intensified since the lifting of the student number cap, with the number of students at private universities up tenfold during the last parliament.

The White Paper is central to the ruling elite’s aim of privatising all education provision, initiated under the 1997-2010 Labour government of Tony Blair and Gordon Brown. Labour opened the door to privatization by introducing tuition fees in 1999 and introducing the first private university in 2010.

Labour leader Jeremy Corbyn verbally opposed the fee hike and launched a petition, stating, “I want to make it clear to the prime minister [David Cameron] that he will not get any support from these benches on raising tuition fees.”

However, Corbyn is supine in the face of the Tory government’s drive to convert primary and secondary schools to privately run academies. Labour, under his leadership, scrapped his pledges to remove fees and reinstate grants, with a member of his shadow cabinet stating these would not “automatically become policy.”

The Labour and union bureaucracy have aligned themselves with the core of the Tory agenda, despite limited policy differences. Jonathan Clifton of the Labour-linked Institute for Public Policy Research openly supported the measures, stating, “The government is right to allow new providers into the higher education system, but it must manage the process carefully.”

University College Union (UCU) General Secretary Sally Hunt said of the White Paper, “Despite repeated warnings from UCU about the danger of opening up UK higher education to private, for-profit providers, the government is setting out on a clear course to privatise higher education.”

She did not oppose the Tories agenda in principle, stating instead that, based on international experience of such proposals, including in the US, “lessons must be learned and rigorous quality measures applied before any new provider is allowed to access either degree awarding powers or state funding.”

The UCU and other academic unions, despite professing opposition to attacks on further and higher education, have a record of capitulation to cuts and job losses spanning more than a decade.

The National Union of Students (NUS) verbally opposed the tuition increase, with its president Malia Bouattia stating it will be “fighting with all its strength to demand it ditches this disastrous plan.”

This same organisation systematically demobilised student opposition to the introduction of tuition fees. Accepting their subsequent hiking, the NUS then threw outs its pledge to “oppose further rises in tuition fees.” It did not lift a finger to prevent the maintenance grant cuts.

Students and youth must mount an independent political struggle, turning to the working class as the only social force that can defend education and prevent the dismantling of gains made over generations of class struggle. This is the standpoint advanced by the International Youth and Students for Social Equality.