Europe is Powerless in Growing Conflict Between the US and Iran

Patrick Cockburn

Brexiteers in Britain are denouncing the EU as an all-powerful behemoth from whose clutches Britain must escape, just as the organisation is demonstrating its failure to become more than a second-rate world power.

The EU’s real status – well behind the US, Russia and China – has just been demonstrated by its inability to protect Iran from US sanctions following President Trump’s withdrawal from the Iran nuclear deal of 2015. A year ago, Angela Merkel and Emmanuel Macron made humiliating visits to Washington to plead vainly with Trump to stay with the agreement, but were rebuffed.

Since then the US has successfully ratcheted up economic pressure on Iran, reducing its oil exports from 2.8 to 1.3 million barrels a day. The UK, France and Germany had promised to create a financial vehicle to circumvent US sanctions, but their efforts have been symbolic. Commercial enterprises are, in any case, too frightened of the ire of the US treasury to take advantage of such measures.

Iranian president Hassan Rouhani said on Wednesday that Iran would stop complying with parts of the nuclear deal unless the Europeans provided the promised protection for the oil trade and banks. Everybody admits that Iran is in compliance but this is not going to do it any good.

These are the latest moves in the complex political chess game between the US and Iran which has been going on since the overthrow of the Shah in 1979. It is this conflict – and not the US-China confrontation over trade, which has just dramatically escalated – which will most likely define any new balance of power in the world established during the Trump era. It is so important because – unlike the US-China dispute – the options include the realistic possibility of regime change and war.

The Europeans have proved to be marginal players when it comes to the Iran deal and it was never likely that they would spend much more diplomatic capital defending it once the US had withdrawn. In the long term, they also want regime change in Tehran, though they oppose Trump’s methods of obtaining it as reckless. Nevertheless, the contemptuous ease with which Trump capsized the agreement shows how little he cares what EU leaders say or do.

The Europeans will be spectators in the escalating US-Iran conflict. The US potential is great when it comes to throttling the Iranian economy. Iranian oil exports are disappearing, inflation is at 40 per cent and the IMF predicts a 6 per cent contraction in the economy as a whole. The US can punish banks dealing with Iran everywhere, including countries where Iran is politically strong such as Iraq and Lebanon.

Tehran does not have many effective economic countermeasures against the US assault, other than to try to out-wait the Trump era. Caution has worked well for Iran in the past. After 2003, Iranians used to joke that God must be on their side because why else would the US have overthrown Iran’s two deeply hostile neighbours – the Taliban in Afghanistan and Saddam Hussein in Iraq.

Many Iranian leaders appear confident that they can survive anything Trump can throw at them other than a full-scale shooting war. Past precedent suggests they’re right: in the wars in Lebanon after the Israeli invasion of 1982, Iran came out on top and helped created Hezbollah as the single most powerful political and military force in the country. Likewise, after the US/UK invasion of Iraq in 2003, Iran undermined their occupation and saw a Shia-led government sympathetic to its interests hold power in Baghdad. In Syria after 2011, Iranian support was crucial in keeping its ally Bashar al-Assad in control.

Iran was on the winning side in these conflicts in part because of mistakes made by its opponents, but these will not inevitably happen again. Because the media and much of the political establishment in Washington and western capitals are so viscerally anti-Trump, they frequently underestimate the effectiveness of his reliance on American economic might while avoiding military conflict. At the end of the day, the US Treasury is a more powerful instrument of foreign policy than the Pentagon for all its aircraft carriers and drones.

Trump may not read briefing papers, but he often has a better instinct for the realities of power than the neo-conservative hawks in his administration who learned little from the Iraq war which they helped foment.

So long as Trump sticks with sanctions he is in a strong position, but if the crisis with Iran becomes militarised then the prospects for the US become less predictable. Neither Tehran nor Washington want war, but that does not mean they will not get one. Conflicts in this part of the Middle East are particularly uncontrollable because there are so many different players with contrary interests.

This divergence produces lots of wild cards: Trump is backed by Saudi Arabia and the UAE, but these oil states have had a dismal record of operational incapacity in Syria and Yemen.

The Iranians, for their part, have had their successes where their fellow Shia are the majority (Iraq), the largest community (Lebanon) or are in control of government (Syria). Given that they are a Shia clerical regime, it is always difficult for them to extend their influence beyond the Shia core areas.

Benjamin Netanyahu has led the charge in demonising Iran and encouraging the US to see it as the source of all evil in the Middle East. But Netanyahu’s belligerent rhetoric against Iran has hitherto been accompanied with caution in shifting to military action, except against defenceless Palestinians in Gaza and the West Bank.

A danger is that a permanent cold or hot war between Washington and Tehran will become the vehicle for other conflicts that have little to do with it. These would include the escalating competition between Saudi Arabia and Turkey over the leadership of the Sunni world. Turkey’s independent role would be threatened by an enhancement of US power in the region. So too would Russia which has re-established its status as a global power since 2011 by its successful military support for Assad in Syria.

Trump hopes to force Tehran to negotiate a Carthaginian peace – particularly useful if this happens before the next US presidential election – under which Iran ceases to be a regional power. Regime change would be the optimum achievement for Trump, but is probably unattainable.

If Trump sticks to economic war it will be very difficult for Iran to counter him, but in any other scenario the US position becomes more vulnerable. There is an impressive casualty list of British and US leaders – three British prime ministers and three US presidents – over the last century who have suffered severe or fatal political damage in the Middle East. Trump will be lucky if he escapes the same fate.

A million species threatened with extinction, UN-backed report warns

Daniel de Vries 

The Earth’s natural system is deteriorating at an unprecedented rate and poses an urgent threat to humanity, a group of leading scientists warned last week in a release of the most comprehensive assessment of global biodiversity ever conducted. Existing policy responses are grossly inadequate and nothing short of “transformative changes” can stop the accelerating obliteration of nature, the assessment found.

Around a million species—perhaps an eighth of all plant and animal species on Earth—are in danger of going extinct, many within a matter of decades, according the report from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).

While there have been five previous mass extinctions during the 3.5-billion-year history of life on Earth, the die-off of biodiversity over the past 50 years is not only unprecedented in the existence of humanity, it is caused by our species.

“The overwhelming evidence of the IPBES Global Assessment, from a wide range of different fields of knowledge, presents an ominous picture,” Robert Watson, the group’s chairperson, explained last week at the public release of the summary report. “The health of ecosystems on which we and all other species depend is deteriorating more rapidly than ever. We are eroding the very foundations of our economies, livelihoods, food security, health and quality of life worldwide.”

IPBES, like the parallel effort on global warming by the Intergovernmental Panel on Climate Change (IPCC), is convened under the auspices of the United Nations to assess the current state of knowledge of the environmental crisis and to explore the connections with economic development pathways. The report is the product of 145 leading experts from around the globe, reviewing around 15,000 scientific studies as well as information from indigenous peoples. It is the first comprehensive look at biodiversity loss since 2005.

The statistics assembled by these experts reveal the extent of the crisis. Three-quarters of land environments and two-thirds of marine environments have been “severely altered,” the report found. A staggering 85 percent of wetlands that existed in the pre-industrial era have been wiped out. Around a third of forest areas have also disappeared.

The widespread alteration of land and sea, along with direct exploitation, are the leading drivers of the spectacular collapse in entire groups of species. More than 40 percent of amphibians are in danger of extinction. A third of all corals and sharks may disappear in the coming decades.

“Ecosystems, species, wild populations, local varieties and breeds of domesticated plants and animals are shrinking, deteriorating or vanishing. The essential, interconnected web of life on Earth is getting smaller and increasingly frayed,” German biologist and report co-chair Josef Settele said.

Climate change is also a major factor in the destruction of nature, and one that is expected to worsen as temperatures rise further. Warming alone is estimated to threaten approximately 5 percent of species with extinction at a 2 degrees Celsius increase—a threshold the world is on course to surpass within a few decades. If temperatures rise 4.3 degrees, 16 percent of all species may be at risk of climate-related extinction.

Avoiding the worst impacts of global climate change, in turn, also depends on maintaining healthy natural systems. “Marine and terrestrial ecosystems are the sole sinks for anthropogenic carbon emissions, with a gross sequestration of 5.6 gigatons of carbon per year (the equivalent of some 60 per cent of global anthropogenic emissions),” the report notes.

The destruction of nature has already brought severe consequences to humanity. “Nature plays a critical role in providing food and feed, energy, medicines and genetic resources and a variety of materials fundamental for people’s physical well-being and for maintaining culture,” the report states. More than 800 million people in Africa and Asia are threatened with hunger, while a full 40 percent of the globe lacks access to clean drinking water.

The loss of nature and its ability to support these life-sustaining functions are projected to worsen under most economic and social scenarios assessed in the report.

Much of the discourse about biodiversity loss and species extinction has centered around human population growth. The world’s population has more than doubled since 1970, creating additional demands for food and resources. While the authors identified this growth as a key “indirect driver,” they also make clear that even with continued moderate increase in population, “nature can be conserved, restored and used sustainably.”

In contrast, the report points to a variety of unsustainable production practices and economic policies, including an estimated $100 billion in agricultural subsidies in the advanced capitalist countries that may directly harm the environment. The irrational management of marine resources has led to a third of fish stocks being harvested at unsustainable levels, with another 60 percent “maximally sustainable fished.” On land, harmful practices and land use decisions have resulted in the degradation of 23 percent of the global land area.

What is necessary is not a few enlightened policy initiatives, however. The report makes a clear call for “transformative change,” that is, “fundamental, system-wide reorganization across technological, economic and social factors.” What is lacking is not the knowledge or technological capability to implement these changes, but the necessary social initiative.

“By its very nature,” Robert Watson of IPBES said, “transformative change can expect opposition from those with interests vested in the status quo, but also … such opposition can be overcome for the broader public good.”

Translated from the cautious wording of scientific studies conducted under the auspices of the United Nations, the issue confronting humanity is the incapability of dealing with ecological catastrophe under the present regime: an economy based on private profit and a world divided into antagonistic nation-states. The problem is capitalism as a global system.

Germany: Siemens hives off energy and power plant division

Elisabeth Zimmermann

Siemens is hiving off its entire energy and power plant division, formerly known as Power & Gas. Together with the wind power group Siemens Gamesa, in which Siemens still has a 59 percent stake, it will continue as an independent company and be floated on the stock market by September 2020. This was decided unanimously by the Siemens Supervisory Board on May 7, with the support of the so-called “employee representatives”.

The new company will have about 80,000 employees, with sales of around 30 billion euros. These include the gas and oil business, power plant construction, energy transmission and renewable energies. It accounts for almost one third of the previous sales of the Siemens group. Siemens’ share in the new company should be below 50 percent and will continue to fall, so that the figures no longer have to be reported in the Siemens balance sheet.

After Siemens CEO Joe Kaeser had announced this decision to investors and major shareholders, Siemens share price rose by about five percent.

The power plant division has one of the longest histories in the company. It has existed for 170 years as a central part of Siemens as an electrical and industrial group. In Germany, about 20,000 work in this area, across about 20 factories. It remains largely uncertain how their future and that of their colleagues in other countries will work out.

Those affected by the spin-off include Siemens employees in the Ruhr—4,500 in Mülheim and 2,600 in Duisburg—with 6,000 employees hit in Berlin, at the gas turbine plant and parts of the switch gear works. In Berlin, this amounts to almost one in two of 12,500 Siemens jobs. There are also other plants, including in Erfurt and Görlitz, where there have been fierce protests in recent years against the planned closure or sale.

The “Vision 2020 + ” restructuring programme, which Siemens presented in August last year, had still envisaged continuing P & G (Power & Gas) as a central business unit of Siemens, alongside DI (Digital Industries) and SI (Smart Infrastructure). After the spin-off of the energy and power plant area, only the last two remain as so-called core areas of Siemens. Digital Industries encompasses everything to do with digitization and industrial automation. Smart Infrastructure is the former Siemens building technology division.

Other areas are already largely independent. Siemens Healthineers (medical technology) is already listed on the stock exchange. Siemens Mobility has also been spun off; this had involved a planned merger of the train division with that of the French Alstom group, but was prohibited by the EU Commission. Again, a possible IPO is not excluded.

In any case, all these companies must now stand alone in the market. Shareholders expect jobs and working conditions to be attacked and dismantled even faster than they have been in order to boost profit rates.

Similar developments are currently taking place in other traditional large companies. For example, Thyssenkrupp announced a new corporate strategy on Friday, which aims to spin off and market the individual divisions and to transform the group into a holding company. Here, too, the executive board and shareholders have the full support of the IG Metall union and the works council.

With the spin-off of the energy sector, the Siemens board is trying to disengage from problems in that sector. Developing the energy sector has been difficult worldwide for several years. Large gas turbines are hardly in demand due to the switch to alternative energy sources, especially in Europe.

An ongoing savings programme will cut thousands of jobs, and thousands more will follow in the coming months. The company’s goal is to cut costs by about one billion euros over the next four years.

These broad-based attacks on the Siemens workforce continue despite the company announcing a second quarter earnings increase (January to March 2019). The operating profit in the industrial business rose by seven percent to 2.41 billion euros. Turnover climbed to 20.9 billion euros. The energy sector also improved its return to 5.6 percent.

But this is far too little for the Siemens board and the major shareholders. Overall, CEO Kaeser expects eleven to twelve percent profit in this financial year. After the spin-off of the energy sector, it should be 14 to 18 percent. The goal is to achieve even higher profits of up to 20 percent in the few remaining areas, which requires even sharper attacks on the company’s blue- and white-collar workers.

For example, Digital Industries is expected to cut 4,900 jobs, Smart Infrastructures 3,000 and Central Functions an additional 2,500 jobs, making a total of 10,400 jobs worldwide.

The IG Metall and the works council stand completely on the side of the management and the shareholders. The so-called “employee representatives” on the Supervisory Board have both approved the spin-off of the energy sector and the programme to increase efficiency in the areas remaining at Siemens.

The chair of the group’s general works council, Birgit Steinborn, is, at the same time, Siemens deputy supervisory board chair, and according to a report by Spiegel on-line pockets nearly half a million euros. Board member Jürgen Kerner sits on the supervisory board for the IG Metall.

On 7 May, the IG Metall Siemens Dialog newsletter supported the company policy. What was crucial for the union bureaucrats on the supervisory board was only that the newly formed company has its headquarters in Germany, so that the existing labour relations continue and the union and works council representatives do not lose their posts and privileges.

A few months ago, Kerner and Steinborn had justified their agreement to the then planned reorganization on the grounds that they had ensured that “the areas subject to reorganization remained under the umbrella of Siemens AG.” Now they claim that only by spinning off the energy sector and the employees there can they be given better future prospects. “If the division remained in Siemens AG, investments would be further reduced. The area would literally starve to death,” said Steinborn.

The supposed job security being promised is not worth the paper it is written on. This has already been proven by numerous similar spin-offs and sales in recent years, with thousands of jobs being destroyed time and time again.

A real struggle against ever-increasing job losses and worsening working conditions is only possible by breaking with the trade unions, setting up independent action committees and uniting the working class internationally based on an international socialist programme.

Sri Lankan austerity measures to deepen after terrorist attack

Saman Gunadasa

Last month’s terrorist bombings have compounded the mounting problems of the Sri Lankan economy. The government is seeking to impose the burden on the backs of the workers and poor, on top of the austerity measures prescribed by the International Monetary Fund (IMF).

Exploiting the suicide bomb explosions on April 21, President Maithripala Sirisena imposed a state of emergency and deployed thousands of military and police personnel. Under the pretext of “fighting terrorism,” the government will use the sweeping anti-democratic measures to push through harsh attacks on social and living conditions.

Sunday Times columnist Nimal Sanderatne wrote last week: “[T]he cumulative impact of the current terrorism would be to destabilise the economy and slow economic growth.” This “would impact adversely on the balance of payments, external financial position and fiscal outcome” and “increased external vulnerability would be the most serious consequence.”

The LMD-Nielsen Business Confidence Index published last week noted that business confidence in April fell to its lowest in over a decade and “it is likely that confidence will fall further in May.”

The new problems have come on top of the mounting economic difficulties produced by the global downturn. According to the 2018 Central Bank Annual Report, issued last month, economic growth declined to 3.2 percent in 2018, from 3.4 percent in the previous year. Per capita GDP (gross domestic product) fell from $US4,104 in 2017 to $4,102 in 2018.

At the same time, foreign debt repayments this year rose to a staggering $5 billion. Out of that amount, the government paid $1.5 billion by raising loans from India, as well as China. The government raised another $2.4 billion in March by selling sovereign bonds to shore up declining foreign reserves.

The Sri Lanka rupee has depreciated by 1 percent since the terrorist attacks, after depreciating by 16 percent last year.

The immediate concern of big business and the government is the impact of the bombings on tourism, the country’s third largest source of foreign exchange earnings. Earnings from tourism last year totaled $4.4 billion, but that could decline by $1.5 billion this year according to Sanath Ukwatte, president of the Hotels Association of Sri Lanka.

The April 21 attacks targeted three churches and three luxury hotels in Colombo. At least 50 foreigners, mostly tourists, were among the dead. According to media reports, many hotel and resort bookings have been cancelled until October.

Tourism employs nearly 400,000 workers, many of them casuals whose employment is now under threat. Tens of thousands small shopkeepers also have been affected.

Finance Minister Mangala Samaraweera declared last week that tax concessions would be granted for investments in the tourist sector, while banks announced a one-year moratorium on loan repayments.

Samaraweera urged foreign investors “to go ahead with their plans and not reverse or abandon them.” He vowed: “We will quickly restore the status quo of 20 April and our resolve has become stronger.”

Other foreign investments could be affected. Finance Ministry Secretary R.H.S. Samaratunga told the Ceylon Today there was a risk of portfolio investment outflows, particularly in the rupee-denominated Government Security Markets.

A 10 billion-rupee outflow of portfolio investment has been recorded so far this year, including 3.3 billion rupees after the bomb attacks, according to Central Bank data.

The government has allocated 393 billion rupees for defence expenditure this year. This figure will increase as tens of thousands of military personnel have been deployed for house-to-house search operations for the first time since the end of communal war against the separatist Liberation Tigers of Tamil Eelam in May 2009.

Finance ministry officials told the Ceylon Today that “the focus must be on military intelligence and targeted surveillance. This may require some investments in technology.” But “this expenditure could be managed within the budget by the realignment of spending priorities.”

This “realignment” means the government will give priority to military expenditure, at the expense of social programs. During the 26-year war against the LTTE, successive governments imposed wage freezes and slashed welfare programs, including price subsidies, as well as expenditure on education and health, to prioritise war expenditure.

A day after the April 21 bombings, IMF Sri Lanka mission chief Manuela Goretti declared she was “deeply saddened by the Easter Sunday bomb attacks in Sri Lanka” but said there would not be any let up in implementing the IMF’s demands.

Goretti reiterated her praise for the government’s budget and insisted that “revenue-based fiscal consolidation” was important to “shore up market confidence given Sri Lanka’s high debt and refinancing needs.”

IMF press conference transcripts show that in May it decided to extend its fiscal deficit cut targets until June 2020 and to spread its final $500 million loan instalment into three parts. This means the IMF will keep a longer-term whip over the government.

The IMF’s conditions for the $1.5 billion loan, approved in mid-2016, include cutting subsidies for workers and the poor, and the privatisation and commercialisation of state-owned enterprises.

During last year, real wages in the public and private sectors declined by 2 percent and 3.5 percent respectively, according to the Central Bank Annual Report.

Now that government revenue is expected to decline significantly, Reuters predicted that “budget targets agreed with the IMF may have to be reviewed,” although “the government is expected to resist pressure for any spending cuts before elections expected later this year.”

The Central Bank Annual Report insisted that implementing the IMF prescriptions was a priority. It declared that “economic performance has fallen below expectations in recent years impacted by the continued delays in the implementation of the required structural reforms.”

In its efforts to justify spending cuts, the government has adopted the slogan: “national security first.” It will seek to use the military-police repression and anti-Muslim campaign to suppress workers’ struggles.

Duterte consolidates hold on Philippine politics in midterm election

Joseph Santolan

On Monday the Philippines held midterm elections contesting thousands of positions, from city council and mayoral posts to the national legislature, including 12 senatorial seats. At the center of the election was the bid by Philippine President Rodrigo Duterte, now three years in office, to consolidate the hold which he exercises through his allies over Philippine politics. While the election results are still being officially tallied, the unofficial results reveal that the ruling class opponents to Duterte have suffered a historic defeat, securing not a single seat in the Senate.

Since his election in 2016, Duterte has, through a series of party alliances, secured the support of a majority of the Philippine political establishment, including the backing of a supermajority in the House of Representatives. As Duterte launched a fascistic war on drugs, which has now claimed the lives of tens of thousands of poor Filipinos, murdered by police or vigilante death squads, the ruling class in near unanimity lined up in support of his administration.

The one body where the minority opposition still exercised significant sway was the upper house of the legislature. Organized in the Liberal Party, the political apparatus of former President Benigno Aquino III and of current Vice President Leni Robredo, they were able from their position in the Senate to serve as a check on some of the measures which Duterte sought to implement.

The Liberal Party opposition organized its 2019 senatorial bid in alliance with the right-wing party of former military coup plotters, Magdalo, and the pseudo-left organization, Akbayan, naming their slate Otso Diretso (Straight Eight).

Based on the current unofficial counts, all of the available 12 seats in the Senate will go to allies of Duterte. There is an outside possibility that Bam Aquino, an Otso Diretso candidate, might secure the 12th slot.

Every prior midterm election in Philippine history has seen a swing in favor of the opposition party. The defeat of the ruling class opposition by Duterte is unprecedented. At the heart of Otso Diretso's defeat is the character of the campaign which they ran.

Duterte’s fascistic policies, martial law and death squads are a sharp expression of a global trend. Confronting the crisis of world capitalism and the growth of social opposition in the working class, the capitalist class is everywhere preparing the apparatus of authoritarian forms of rule.

There is no democratic opposition to these dictatorial maneuvers in any section of the bourgeoisie. They are all of them committed to the suppression of the working class.

The opposition to Duterte within sections of the Philippine bourgeoisie is not mobilized on the basis of defending democracy, but rather in support of the interests of Washington, the country's former colonial master.

Over the past three years Duterte has, in a volatile fashion, reoriented Manila's diplomatic and economic relations away from Washington and begun to cultivate deeper trade and political ties with Beijing. Otso Diretso made this the focus of their campaign, denouncing Duterte as a stooge of China, decrying him for being unwilling to go to war with Beijing in the South China Sea.

Among the candidates fielded by Otso Diretso were Mar Roxas, scion of a political dynasty, former New York based investment banker and failed presidential candidate. A representative above all of American finance capital, Roxas outspent every other candidate and still failed to secure a seat.

Other opposition senatorial candidates included Gary Alejano, a former military officer guilty of multiple coup attempts, and Florin Hilbay, Solicitor General under the Aquino administration responsible for bringing Manila's case against Beijing before the International Tribunal on the Law of the Sea. They spearheaded the Otso Diretso campaign to demand Duterte take an aggressive stance against China.

Four Otso Diretso senatorial candidates in late April attempted to travel to the disputed Scarborough shoal in the South China Sea to plant the Philippine flag as a culminating gesture of their campaign. The opposition cultivated the worst forms of anti-Chinese chauvinism, denouncing Chinese workers in the Philippines, speaking of a “Chinese invasion,” and posting images on social media of printed Chinese language material in the Philippines as evidence of Duterte’s service as a “puppet” of Chinese “imperialism.”

At the same time, Otso Diretso demanded and secured censorship on Facebook and other social media platforms. Taking their cue from demands raised by the Democratic Party in the United States, they spoke of “weaponized social media” and secured from Facebook a ban on over 200 Facebook pages, one of which had over 3.6 million followers. Facebook stated that the accounts were removed because of “coordinated inauthentic behavior.”

In a word, Otso Diretso opposed Duterte from the right.

Current tallies show that 45.8 million people voted in the midterm elections, approximately 72 percent of the registered electorate, an average turnout for a midterm election in the Philippines. The only precincts that cast a substantial majority of ballots for the Otso Diretso candidates were bastions of the extremely wealthy. Forbes Park, Ayala Alabang, Greenhills, White Plains—the gated communities of the rich—all voted for the opposition.

Among the top vote getters were Cynthia Villar and Grace Poe. Villar, who is an incumbent senator and wife of a former presidential candidate, represents real estate money and is from one of the wealthiest families in the country. Poe is a former presidential candidate, whose husband was an intelligence contractor for the CIA a decade ago.

Two new faces rose to win seats in the Senate, both on the basis of their ties to Duterte. Bato dela Rosa was installed as the head of the Philippine National Police when Duterte took office and was directly responsible for implementing his war on drugs. Bong Go was the special advisor to the President, and more than any other figure was the author and implementor of the right-wing policies of his administration.

The new ruling coalition in the Senate is not as stable as might at first appear. The leading candidates in Duterte’s alliance are established politicians who have attached themselves to his presidency out of a political expediency that may shift. While it lasts, however, Duterte has stated that he intends to use this supermajority to attempt to reinstate the death penalty, to lower the age of criminality to nine, and to remove term limits on the presidency.

A portion of the support for Duterte's candidates stems from the support which his right-wing populism has among some poor layers of the population. The Philippines is a country with an immense and impoverished petty bourgeoisie—small shopkeepers and owners of micro-businesses. In the absence of an independent movement of the working class, the President's foul-mouthed denunciations of the elite and of the Catholic church have found wide play.

This is expressed in the collapse of the long-standing political dynasty of Joseph Estrada, the former movie star who pioneered a milder form of populism during his rise from mayor to president. His brand of posturing as a man of the people has now been supplanted by the right-wing lumpen populism of Duterte. In the 2019 election, his entire family lost all of their political seats, in the senate, in the Manila mayoral race, and in their home base of San Juan.

Like Duterte’s war on drugs, his fascistic program and policies are fostering the growth of extreme right-wing groups which will inevitably be used against growing opposition to deteriorating living standards.

The top political party to secure congressional seats under the party list system was the Anti-Crime and Terrorism through Communist Involvement and Support (ACT-CIS) party. Associated with the Tulfo family of shock journalists, whose fascistic rants in the newspapers and television are closely tied to Duterte, ACT-CIS secured twice as many votes as the second highest party list group. ACT-CIS is an organization founded by former police chiefs dedicated to creating vigilante organizations with government funding, and among its leading legislation is the "community informant reward act."

The party list organization Duterte Youth won over 350,000 votes, not enough to secure a seat. The organization seems consciously modeled on the Hitler Youth. Its members wear black uniforms with red armbands and advocate violent anti-communism and mandatory military training for high school and college students. Their election statement published on May 6, addressed itself to allegedly "communist" youth, declaring “We will finish you on the streets along with your rapist, criminal and terrorist comrades." The head of Duterte youth is a member of the Duterte cabinet, head of the National Youth Council.

These far-right organisations, while not yet a mass movement of the type that emerged in Germany in the 1930s, constitute a warning of the police state methods that will be used against workers amid a worsening economic, social and political crisis. Only the development of a movement of the working class independent of all factions of the ruling class and their Maoist allies, and fighting for a socialist and internationalist perspective, can counter this danger.

No to war against Iran!

Bill Van Auken

The threat of all-out war in the Middle East is greater today than at any time since the 2003 US invasion of Iraq, and the potential consequences are far graver.

The report that the Pentagon has drawn up plans for dispatching 120,000 US soldiers and Marines to the region in preparation for a war of aggression against Iran must be taken with deadly seriousness by the working class. What is being prepared is a war for regime-change, an act of unmitigated criminality that threatens the lives of millions.

While the New York Times cited half a dozen national security officials who were briefed on the plans, on Tuesday the report was described as “fake news” by US President Donald Trump, who said he is “absolutely” prepared to send troops against Iran, but insisted that “we’d send a hell of a lot more troops than that.”

The troop threat comes on the heels of a series of escalating acts of military intimidation against Iran, with the deployment off the Iranian coast of a battleship-carrier strike group, led by the USS Abraham Lincoln, and a bomber task force, including nuclear-capable B-52s. This has been followed by the dispatch to the region of the amphibious assault warship USS Arlington, carrying US Marines, warplanes and landing craft, as well a Patriot missile battery.

The spark for an all-out conflict can come from any one of a number of incidents or staged provocations in a region where tensions have been brought to a fever pitch by decades of unending US aggression and a military buildup that has turned the southern coast of the Persian Gulf into an armed camp dominated by US air and naval bases.

US military sources are already telling the corporate media—which serves as a contemptible instrument of war propaganda—that it has determined that the alleged sabotage of four vessels, including two Saudi oil tankers, off the coast of the United Arab Emirates (UAE) reported on Sunday was the work of Iran or “Iranian proxies.” No evidence whatsoever has been provided to substantiate this claim about an incident which itself remains murky, but the supposed culpability of Iran is nonetheless echoed as fact by the “embedded” news outlets.

The alleged acts of sabotage were followed two days later by drone attacks on two Red Sea pumping stations operated by Saudi Aramco, the monarchical dictatorship’s national oil and gas company.

Yemen’s Houthi rebels claimed responsibility for the attacks, saying they were launched in retaliation for the near-genocidal US-backed war that has been waged by the Saudi regime against Yemen for the last four years, killing some 80,000 people and bringing over 10 million to the brink of starvation.

The Saudi monarchy, which has terrorized the entire Yemeni population, indiscriminately bombing schools, hospitals, mosques and housing blocs, had the nerve to declare the Houthi retaliation as an act of “terrorism.”

Under the terms of the ultimatums delivered by US Secretary of State Mike Pompeo and national security adviser John Bolton, either of these actions could be the trigger for a war of aggression. As Bolton put it, “any attack on United States interests or on those of our allies will be met with unrelenting force.” Pompeo has vowed “swift and decisive” military action in response to any alleged act by Iran or its so-called proxies challenging US interests in the region.

Any US military action against Iran would come on top of an economic siege against the country. Dubbed a policy of “maximum pressure,” US imperialism has attempted to tie an economic noose around Iran’s neck.

Since unilaterally and illegally abrogating the 2015 Iran nuclear accord, Washington has not only re-imposed sanctions lifted under that agreement, it has waged full-scale economic war aimed at reducing Iran’s oil exports to zero, freezing it out of global financial markets and shutting down its trade with other nations. The Iranian people have paid the price, suffering nearly 50 percent inflation along with rising unemployment and poverty.

While Iran has repeatedly been found in full compliance with the accord’s strict limits on its nuclear program, Washington has threatened that Tehran’s supposed pursuit of nuclear weapons—something it has always denied—could merit military action.

Iran recently responded to the failure of the remaining signatories of the nuclear accord—in particular, Germany, France and the UK—to effectively counter the US blockade and provide promised sanctions relief by threatening to resume enriching uranium on a higher level. Though allowed under the deal, this action could also be seized upon by Washington as a pretext for military aggression.

What would be the consequences of a US war against Iran, a country that is four times as large and has more than twice the population of Iraq? The war launched by the Bush administration 16 years ago killed over a million Iraqi civilians, while claiming the lives of nearly 4,500 US troops and wounding over 30,000 more. Not only would the carnage this time around be vastly greater, but a war against Iran would inevitably draw in the entire region, as well as the countries dubbed by Washington’s military and intelligence apparatus as US imperialism’s “great power” competitors, including nuclear-armed Russia and China—under conditions where the US has launched an all-out trade war against Beijing.

While US policy is in the immediate sense largely driven by the steady military escalation itself, underlying it are a combination of global imperialist interests and sharpening internal social and political contradictions.

It is hardly coincidental that Washington is simultaneously threatening military intervention in both Iran and Venezuela. The first country holds the second-largest oil reserves in the Middle East, while the second boasts the largest proven reserves in the world. In an attempt to offset the ongoing decline in its world economic position, US imperialism aims to assert its undisputed grip over the world’s energy reserves. This would empower it to ration—or cut off altogether—supplies to its rivals, in the first instance China, but also Europe. Such ambitions point the way to a third world war.

The buildup to war against Iran is also powerfully driven by the intensifying social and political crisis within the United States itself, characterized by unsustainable levels of social inequality produced by an economy based on financial parasitism.

With the growth of the class struggle, reflected in the highest number of strikes in the US in more than three decades, the capitalist oligarchy sees in war a means of redirecting social tensions outward, while at the same time creating the conditions for increasingly authoritarian forms for rule. Just as Julian Assange and Chelsea Manning have been hounded and imprisoned for exposing past US war crimes, so an escalation of militarism abroad will be used to criminalize all opposition to both war and capitalist rule in the US.

The war drive against Iran is being prosecuted largely behind the backs of the American people. There is not even the pretense of seeking legal sanction by taking Washington’s trumped-up and unsubstantiated claims of Iranian aggression to the United Nations, let alone congressional authorization (which the Democrats would supply), as was done with the “weapons of mass destruction” fraud in the 2003 unprovoked war against Iraq. Nor is there an attempt to create a “human rights” fig leaf as in the wars against Libya and Syria.

The launching of a war against Iran will produce popular shock and outrage. There is widespread opposition to war and deep and abiding skepticism and hatred for the political establishment and media among broad sections of workers and youth.

The greatest danger, however, is that this mass social opposition is not politically organized, while the entire spectrum of official politics, both Democratic and Republican, supports the catastrophic war policy of American imperialism.

Whatever the immediate outcome of a US strike on Iran, events are moving relentlessly in the direction of world war. This reality must drive an urgent international struggle for a politically conscious intervention of the working class to put an end to imperialism and reorganize society on socialist foundations.

Questcor Pharmaceuticals and Mallinckrodt: Financial parasitism and the US pharmaceutical industry

Brian Dixon

According to a recently unsealed lawsuit filed by whistleblowers, Questcor Pharmaceuticals, now owned by Mallinckrodt, allegedly bribed doctors to increase the sales of its H.P. Acthar Gel, an anti-inflammatory drug that until recently was primarily used to treat babies with infantile spasms.

Questcor, and later Mallinckrodt, has come under intense criticism for raising the price of Acthar Gel by over 97,000 percent over the past 18 years.

Questcor did not spend millions of dollars researching and developing Acthar Gel—the catch-all rationalization used by the pharmaceutical industry to justify its price-gouging practices—but instead acquired the drug from another company, dramatically hiked the price, and then fought off potential generic competitors and aggressively marketed the drug to drive up sales. Mallinckrodt, which purchased Questcor for $5.6 billion in 2014 solely to acquire Acthar, continued this basic strategy.

Price hikes of Acthar drug by Questcor and Mallinckrodt

The Justice Department intervened in the lawsuit after conducting its own investigation and finding the whistleblower claims to be credible, leading a federal court to release the complaint on March 6.

According to CNN, the lawsuit claims that Questcor “has cheated the federal government out of millions of dollars that should not have been paid, thereby enriching [the company] and subjecting patients to unapproved, unsafe and potentially ineffective uses of H.P. Acthar Gel.”

“Questcor has attempted to conceal and cover-up its payment of kickbacks and its illegal promotion of H.P. Acthar Gel by making false statements to the FDA and directing employees to conceal evidence,” the lawsuit says.

These illegal practices by Questcor began in 2007 and “have knowingly been continued since the merger and acquisition of Questcor by Mallinckrodt.”

The business strategy of Questcor and Mallinckrodt reflects the increasingly parasitic and predatory nature of the pharmaceutical industry under the pressure of finance capital and highlights the irrationalities of drug development and medical care under the capitalist profit system.

Acquiring an old drug and raising the price

While Turing Pharmaceuticals and Valeant Pharmaceuticals have come under scrutiny in recent years for acquiring old drugs and then dramatically hiking the price, they were simply following a path forged by Questcor and Mallinckrodt.

The active ingredient of Acthar Gel, adrenocorticotrophic hormone (ACTH), was first obtained from the pituitary glands of pigs by a division of Armour and Company in 1948. Acthar Gel, a purified form of ACTH mixed with gelatin to provide an extended release of the drug after injection, received approval by the Food and Drug Administration (FDA) in 1952. Doctors began using Acthar off-label (uses not approved by the FDA) to treat infantile spasms in 1958.

The product was eventually acquired by Rhone-Poulenc, which—through a series of mergers and acquisitions—became Aventis and then Sanofi.

In 2001, Questcor Pharmaceuticals, an Anaheim, California-based company founded in 1990, purchased the rights to Acthar from Sanofi for $100,000.

At that time, Acthar was sold for $40 per vial. Questcor quickly raised the price to $750 a vial and doubled the price a short time later. Then, on August 27, 2007, Questcor raised the price from $1,600 to $23,000 a vial. Since acquiring Acthar in 2014, Mallinckrodt has raised the price to $39,000 per vial—a 97,000 percent price increase since 2001.

Critical to Questcor’s strategy was maintaining its monopoly hold on the drug while jacking up the price. Although the patent on the drug had expired, a proprietary and complex manufacturing process kept most potential generic competitors at bay.

Still, there did exist a competing product, Synacthen Depot, which was much cheaper than Acthar. Questcor purchased the US rights to Synacthen in 2013 from Novartis AG to ensure that competing companies didn’t acquire and sell the drug at a lower price. In 2017, Mallinckrodt reached a $100 million settlement with the Federal Trade Commission for its anti-trust law violations. As part of the settlement, Mallinckrodt agreed to sell the rights to Synacthen to another company, but it did not admit guilt.

Early on, Questcor came to terms with the reality that doctors generally limited Acthar’s use to infantile spasms. After Mallinckrodt acquired Questcor, however, it pushed the drug into other areas—including rheumatology, pulmonology, ophthalmology, dermatology and kidney disease—where there was little evidence to support the drug’s use and cheaper alternatives were available.

Mallinckrodt states that the company has conducted additional research on the drug, but these trials have been relatively small in size, few in number and riddled with conflicts of interest.

In a 2017 editorial in JAMA Internal Medicine, Saate Shakil and Rita F. Redberg, both from the Department of Medicine at the University of California, San Francisco, reviewed the clinical trial evidence for Acthar gel.

While the drug’s effectiveness for treating infantile spasms was established by clinical trials conducted in the 1980s, the evidence for the drug’s effectiveness in treating adults in specialties such as rheumatology, neurology and nephrology is severely wanting.

“The lack of high-quality evidence supporting Acthar gel’s benefit in a variety of conditions,” Shakil and Redberg conclude, “along with the unconscionable price increase by the manufacturer, should give pause to all practitioners.”

How would Mallinckrodt convince doctors to prescribe a treatment for which there was little evidence to support its use and when there were readily available cheaper alternatives? As the whistleblower case reveals, the company did so by allegedly bribing doctors and even their staffs.

Mallinckrodt allegedly bribes doctors and fleeces Medicare

The lawsuit claims that the company, among other illegal activities, violated the federal Anti-Kickback Statute by bribing doctors, promoted Acthar for off-label uses and caused false claims to be submitted for reimbursement by federal healthcare programs.

Starting with Questcor and continuing on at Mallinckrodt, the lawsuit claims that the bonuses for sales representatives were designed to promote a “sell at all cost” mentality.

When the company ran into resistance from doctors treating multiple sclerosis (MS) patients because there already existed a cheaper alternative, it turned to bribing doctors to get them to change their prescribing behavior. When MS doctors refused to meet with Questcor sales representatives, the company resorted to bribing office staff to schedule the meetings anyway.

The strategy paid off, as a relatively small group of doctors increased their prescriptions of Acthar. An investigation conducted by CNN last year looking at Medicare Part D claims found that the number of claims for Acthar rose from 1,471 in 2011, to 12,867 in 2016. Over this five-year period, Acthar claims cost the Medicare program nearly $2 billion.

The CNN investigation found that more than 80 percent of the doctors who filed Medicare claims for Acthar in 2016 received compensation from Mallinckrodt for consulting, speaking and other services. Between 2013 and 2016, Questcor and then Mallinckrodt paid 288 prescribers $6.5 million.

The CNN investigation followed the publication of a 2018 research article in JAMA Network Open that conducted a cross-sectional study of 235 specialist physicians who frequently prescribed Acthar. It found that 88 percent of these specialists received compensation from Mallinckrodt in 2015.

Three hundred frequent prescribers (out of a total of 1,743 prescribers) were responsible for more than half of the $500 million Medicare spent on Acthar in 2015. Over 20 percent of the frequent prescribers received $10,000 or more in compensation from Mallinckrodt.

The researchers found that every $10,000 paid to doctors by Mallinckrodt corresponded to a $53,000 increase in Medicare spending on Acthar, a 5:1 return on investment.

At the same time that Mallinckrodt is fleecing taxpayers and driving up health care costs, it has gone to great lengths to avoid paying US taxes. Founded in 1867 in St. Louis, Missouri as a chemical processing firm, the company remains based in St. Louis, but headquartered itself in Ireland for tax purposes after it executed a corporate tax inversion in 2013. The tax inversion freed up money for Mallinckrodt to merge with and acquire other companies, including its purchase of Questcor in 2014.

Mallinckrodt contributes to the opioid epidemic

Although Acthar is Mallinckrodt’s primary moneymaker, the company is also one of the country’s largest manufacturers of the opioid painkiller oxycodone. Like a number of other drug companies and drug distributors, Mallinckrodt flooded communities with opioid painkillers and ignored laws designed to prevent diversion to the black market.

Federal law requires drugmakers to monitor opioid sales and report any suspicious orders to the Drug Enforcement Agency (DEA), but Mallinckrodt failed to conduct due diligence as long as the money continued to pour in, according to a 2017 report in the Washington Post .

The DEA began investigating the company in 2011 after discovering diversionary activities among some of the drug wholesalers to whom Mallinckrodt was selling painkillers. In 2010, for example, the drug distributor KeySource Medical shipped 41 million tablets of Mallinckrodt’s oxycodone to Florida.

Ultimately, Mallinckrodt shipped 500 million pills to Florida, 66 percent of all oxycodone sold in the state, between 2008 and 2012—enough painkillers to provide every man, woman and child in the state with 6 pills every year.

So many of Mallinckrodt’s 30-milligram oxycodone tablets flowed into Florida that drug dealers and users began referring to them as “M’s” because of the company’s logo on the pills.

Mallinckrodt continued to ship painkillers even after the DEA informed them of abuses by particular wholesalers. In total, federal prosecutors discovered 43,991 suspicious orders from drug distributors that Mallinckrodt should have reported and which could have resulted in fines as high as $2.3 billion.

When prosecutors put forward their settlement offer in 2015, however, instead of pursuing billions in fines, they proposed a $70 million fine that was eventually whittled down to $35 million, citing “litigation risk” if the case were to go to trial.

For a company that in 2016 had $3.4 billion in revenue and $489 million in profit, the fine was insignificant. As one government official told the Post, this was “chump change.”

PhRMA Kicks Mallinckrodt Out of Trade Group

The entire pharmaceutical industry is beset by the same irrationalities and parasitic behaviors, but companies like Mallinckrodt, Turing, Valeant and Marathon Pharmaceuticals—an Illinois-based company that raised the price of its muscular dystrophy drug by 6,000 percent—provide its most vulgar expression. They operate, as Marx put it, where “money, filth and blood comingle.”

In response to the widely publicized outrages committed by these companies, the industry’s trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), kicked out Mallinckrodt and Marathon Pharmaceuticals in 2017 and updated its rules to require companies to spend at least 10 percent of global sales on research and development.

This was purely a cynical public relations exercise. Under the pressure of finance capital, the pharmaceutical companies represented by the trade group are engaged in similar parasitic behavior, focusing on increasing the wealth of shareholders with only minimal investments in research and development.

For example, the 18 drug companies on the S&P 500 index spent $516 billion on buybacks and dividends between 2006 and 2015, 11 percent more than they spent on research and development, according to a 2017 study by the Institute for New Economic Thinking.

The life-and-death tasks of curing disease and advancing medical care cannot be left in the hands of profit-hungry corporations and the banks that finance them. The pharmaceutical industry must be nationalized, transformed into public utilities, on the basis of a larger socialist transformation of the economy.

More than one million Americans lost health insurance in 2018

Alex González 

Estimates from a Centers for Disease Control (CDC) survey reveal that 1.1 million people lost their health insurance coverage in 2018. Last year, over 30 million people did not have health insurance at the time of the study, including 13.3 percent of adults aged 18 to 64 and 5.2 percent of children aged 0 to 17.

After decreasing or leveling off in past years, the number of uninsured is on the rise. The National Health Interview Survey, a nationally representative study, asked participants about both their current health insurance status and whether they have had health insurance in the past year. The report’s results are presented by income status, demographics, and by states that opted or refrained to expand Medicaid under Obamacare.

As with other basic necessities, the ability to afford healthcare is deeply connected to income. In 2018, among adults aged 18 to 64, more than 27 percent of those who were “poor” (with family incomes at or below the poverty line) and about 25 percent of those who were “near-poor” (with family incomes between 100 and 200 percent of the poverty line) did not have health insurance.

Meanwhile, only about 8 percent of those who were “not poor” (with family incomes over 200 percent the poverty line or higher) were uninsured. This means that poor or near-poor were more than three times as likely to be uninsured than the non-poor.

For all age groups, the percentage uninsured at the time of the interview and the percentage uninsured for at least part of the year increased from 2017 to 2018. Some 9.4 percent of individuals lacked health insurance coverage at the time of their interview in 2018, compared to 9.1 percent in 2017.

More than one in ten individuals reported being uninsured for at least part of the year, with this group also increasing from 2017 to 2018. Some 12.9 percent of individuals of all ages reported being uninsured in 2018, while this figure was 12.4 percent in 2017. This means that over 40 million people were uninsured for at least part of the year in 2018.

In 2018, 6 million children aged 0 to 17 did not have healthcare coverage for at least part of the year, and 3.8 million were not insured at the time of the interview. Children who are poor or near-poor were more than 50 percent as likely as children who were not poor to be uninsured. In 2018, 6.4 percent of poor children did not have health insurance at the time of the interview, compared to 6.3 percent for near-poor children and 4.2 percent for non-poor children.

The number of uninsured people has fallen particularly in the 37 states that opted to expand Medicaid coverage under Obamacare. In these states, the percentage of uninsured adults decreased from 18.4 percent in 2013 to 9.9 percent in 2018. In other words, the percentage of uninsured adults aged 18 to 65 in these states decreased roughly by half.

Meanwhile, there are more uninsured adults in states that did not expand Medicaid. Between 2013 and 2015 the percentage of uninsured adults in these states decreased from 22.7 to 17.5 percent, but it increased between 2015 and 2017 from 17.5 to 19.0 percent. In 2018, the percentage of uninsured adults aged 18 to 64 in non-expansion states was 18.7 percent, or more than twice the rate as in the states that chose to expand Medicaid.

While the released report does not detail why individuals lost their health insurance, media reports have pointed to the repeal of the Affordable Care Act’s (ACA) so-called “individual mandate” by the Trump administration’s tax bill in 2017. No longer able to enforce the financial penalty of being uninsured, many individuals may have chosen to drop their healthcare coverage.

Legal challenges to the ACA are currently being decided by appeals courts after a federal district judge in Texas ruled that Obamacare was unconstitutional in December of last year. Between 20 and 25 million people would lose their healthcare coverage if the law that established Obamacare is struck down.

While many people became insured under ACA, the healthcare plans awarded under Obamacare’s insurance marketplaces or state-based exchanges were known for their high deductibles, large out-of-pocket expenses, and limited choice of insurers. In practice, this meant that while families and individuals were forced to buy health insurance, many were still unable to afford decent medical care.

Rising healthcare costs and an attack on benefits has prominently featured in a series of major struggles over the past two years, including strikes by teachers in the US and the ongoing strike by 2,000 nurses in Toledo, Ohio. However, workers that are entering into struggle must be warned: the fight to establish a high-quality and free healthcare system will not be granted by “Medicare-for-All” or proposed “fixes” to Obamacare by Congressional Democrats.

As long as the giant insurance companies and the tiny oligarchy that controls every aspect of social life remain in place, healthcare will remain a privilege for the few, rather than a social right for all. What is needed is a socialist policy for universal healthcare, through nationalizing the healthcare industry into a publicly owned and democratically controlled utility run to meet the needs of the population, not maximize the profits of the corporations.