Inside Brazil’s X Ban: How Elon Musk Started–and lost–a Fight With Brazil’s Judiciary

Brian Mier

Photograph Source: MINISTÉRIO DAS COMUNICAÇÕES – CC BY 2.0

Millions of Brazilians woke up on August 31 in a country without X, after the Supreme Court ordered the national telecommunications agency to block the social media platform. This move culminated over a year of X’s refusal to follow Brazil’s telecommunications laws, particularly those requiring deplatforming of suspects in internet crime investigations. In a single day, X lost 22 million users, while alternative platform Blue Sky gained 2 million new Brazilian users in just three days. The order to ban the platform initially came from Supreme Court Minister Alexandre de Moraes, a figure vilified by the Bolsonaros and the international far right, and was ratified by a 5-0 vote in the Supreme Court’s 1st working group three days later.

The Court order came 12 days after Elon Musk closed X’s Brazilian offices to avoid liability for criminal charges against the company. With X owing R$9 million in fines, the Supreme Court froze the Brazilian assets of Musk’s company Starlink—a minor player in Brazil’s internet service provider industry, serving 250,000 clients in a country of 220 million. After the ban, a furious Musk used his own social media platform to attack one of Brazil’s 11 Supreme Court Ministers, Alexandre de Moraes, inadvertently doxing allies by publishing court documents containing their personal data.

Hailed as a victory for sovereignty while criticized by the far right as an affront to U.S. free speech principles, the X ban is the latest chapter in over a year of conflicts between Brazil and the world’s richest man

To understand how Brazil reached this point, we must go back to October 18, 2018, between the first and second rounds of Brazil’s Presidential elections. That day, investigative journalist Patricia Campos Mello published an article in Folha de São Paulo exposing a group of Brazilian businessmen for spending R$12 million to slander presidential candidate Jair Bolsonaro’s rival, Fernando Haddad, on Meta’s WhatsApp platform. Using illegally acquired personal data, the group microtargeted segments of the population with disinformation. For instance, evangelical voters were bombarded with doctored photos falsely claiming that, as mayor, Haddad distributed baby bottles with penis-shaped nipples to São Paulo pre-school students. As a result, Brazil’s Superior Electoral Court—comprising 3 Supreme Court Justices, 2 Superior Court Judges, and 2 lawyers—immediately launched an election fraud investigation.

This led to a surge in threats against judges in the Supreme and Superior Electoral Courts, extending to their families and calling for a military coup to shut down the Supreme Court. Among those making the call was Jair Bolsonaro’s son, Congressman Eduardo, who recorded a YouTube video seen by hundreds of thousands, saying, “All you need to shut down the Supreme Court is a single soldier or corporal […] Do you think anyone will protest in its defense?”

Unlike some countries, the Brazilian judiciary lacks its own police force. According to the 1988 Constitution, judiciary police duties are assigned to the regular police. The system’s failure to adequately address threats against Supreme and Superior Electoral Court judges prompted Chief Justice Dias Toffoli to issue a decree on March 14, 2019, allowing Supreme Court Minister Alexandre de Moraes to directly supervise a federal investigation into these threats.

As a result, Moraes became the main target of a hate campaign by Bolsonaro’s allies, who argued that, as a victim, he was unqualified to investigate his aggressors. Meanwhile, online threats against the judiciary intensified.

On October 29, 2021, the Superior Electoral Court announced the results of its investigation, with 5 of its 7 Justices confirming that the Bolsonaro campaign had used social media to commit election fraud in 2018. Unable to determine the fraud’s impact, the Court issued no punitive measures. However, Justice Moraes, set to take over the Presidency of the Superior Electoral Court six weeks before the 2022 presidential elections, announced that they now understood the scheme and that anyone using similar tactics in 2022 would “go to jail for attacking elections and democracy.”

Moraes, a conservative appointed to the Supreme Court by coup president Michel Temer in 2017, was already a target of Bolsonarista claims of a “communist dictatorship of the toga.” His upcoming role as head of the electoral court during the presidential election drove the Brazilian far-right into a frenzy.

As destroying the Supreme Court and installing a military dictatorship became the Bolsonarista rallying cry, de Moraes ordered several preventive arrests. These included Congressman Daniel Silveira for abusing his authority by repeatedly urging the army to shut down the Supreme Court while defying court orders. Sara Giromini, who styled herself as Sara Winter after the English fascist leader, was also arrested. She set up an Azov-inspired paramilitary camp outside Brasília, then led followers to camp out in front of the Supreme Court, launching increasingly large fireworks at the building for three days while making online threats against de Moraes and his family.

Clearly inspired by U.S. events—especially since Eduardo Bolsonaro attended the January 5 Washington DC “war council” meeting before the Capitol attack—the Bolsonaros began crafting their own “stop the steal” narrative, drawing more allies from the international far-right. As this campaign grew, Glenn Greenwald joined the attacks on Moraes, using elements of U.S. law that resonated in the Global North but were irrelevant in Brazil’s legal context.

After months of claiming “communists” would steal the elections, and deploying his federal highway police to suppress voting in pro-Lula districts on election day, Bolsonaro lost and fled the country before his term ended, leaving the presidency to his Vice President, General Hamilton Mourão.

In the last 60 days before Lula took office, two Bolsonaro supporters were arrested for attempting to detonate a bomb at Brasília’s airport, while another group staged a violent attack on Brazil’s Federal Police headquarters. Thousands of Bolsonaro supporters camped outside military barracks, demanding the shutdown of the Supreme Court.

A week after the inauguration, on January 8, a crowd invaded the National Congress and Supreme Court. Their goal, according to a detailed coup plan found in Bolsonaro’s Justice Minister Anderson Torres’ house, was to pressure Lula into declaring a state of siege, which would have handed national security to the armed forces. Lula refused to fall for the trick, relying on his federal police to disperse the rioters. Meanwhile, high-tension electrical towers were sabotaged nationwide.

Two months after the capitol riots, a series of school massacres terrorized the nation. Investigators uncovered dozens of neo-Nazi cells targeting children on social media, attempting to incite them to commit school massacres on April 20 in honor of Hitler’s birthday. The Justice Ministry summoned social media representatives and provided a list of accounts requesting deplatforming. X initially resisted. Etela Aranha, then Secretary of Digital Rights, recalls:

“I told them, ‘I’m talking to you because there are profiles of actual terrorists. They use the names and faces of school massacre terrorists, posting videos with songs saying, “I’m going to get you kids, you can’t outrun my gun.” There are clips showing the terrorist’s picture followed by real school massacres.’ The Twitter representative said this didn’t violate their terms. After strong pushback from the justice minister and social pressure, Twitter changed its policy and cooperated with the investigation.” It was one of the last times the company would respect a request from the Brazilian government.

Fast forward to April 3, 2024. A libertarian pundit and former PR operative named Michael Shellenberger tweeted excerpts from emails by X executives, dubbed “Twitter Files Brazil,” alleging crimes by  Alexandre de Moraes. Shellenberger claimed Moraes had pressed criminal charges against Twitter Brazil’s lawyer for refusing to turn over personal information on political enemies. Elon Musk quickly shared the tweets, which went viral and were embraced by the international far right, delighting former President Bolsonaro and his supporters.

Aranha soon exposed the flaws in this narrative. The only criminal charge against Twitter Brazil mentioned in the leaked emails came from the São Paulo district attorney’s office after the company refused to provide data on a leader of Brazil’s largest cocaine trafficking organization, the PCC. Shellenberger had cut an email section about the São Paulo investigation and mixed it with unrelated complaints about Moraes.

Pressed by Brazilian reporters, Shellenberger said: “I regret my mistake and apologize. I don’t have evidence that Moraes threatened to file criminal charges against Twitter’s Brazilian lawyer.”

Three days later, Elon Musk announced his company would stop obeying court orders in Brazil and reinstate accounts of those deplatformed, including Alan dos Santos, a fugitive hiding in the U.S. On X, Musk tweeted a series of insults against Moraes, demanding he “resign or be impeached.”

That night, Moraes ordered X to be included in an ongoing obstruction of justice investigation related to the January 8, 2023, coup attempt and announced a series of fines for refusing to comply with court orders, which have now risen to R$9 million.

Tension continued to mount and on August 7, Musk threatened to close X’s offices in Brazil, claiming court orders to remove accounts of suspects in an online election fraud investigation amounted to “censorship.” His statements were immediately praised by Bolsonaro and allies in the  international far right but had no basis in Brazil’s free speech laws.

Like other nations such as Germany and France, Brazil views the right to free speech as fundamental but not absolute—a right that must coexist with other essential rights. According to Brazil’s constitution, no fundamental right can be used to deny another. This principle allows Brazil to ban actions legal in the U.S., like inciting pedophilia or practicing Nazism. In the case of the digital militia investigation, the court ruled that the right to free expression cannot be used to undermine the right to free and fair elections, another fundamental right in Brazil.

On August 17, Musk fired 40 workers and closed X’s offices in Brazil, leaving behind debts and criminal charges but pledging to keep the platform operational. This violated Brazil’s telecommunications laws, which require any media company operating in the country to have a legal representative. The Supreme Court froze Starlink’s assets until Musk settled his debts, and Moraes warned that if X didn’t appoint a legal representative, the platform would be banned. Instead of complying, Musk escalated his attacks on Moraes and President Lula, sharing an AI-generated image of Moraes behind bars with his 195 million followers.

On August 29, Moraes gave X  24-hours to comply with Brazil’s laws. When X missed the deadline, he ordered Anatel, the national telecommunications agency, to instruct all internet service providers to block X.

With X now offline in Brazil, on Monday, September 2, the Supreme Court held a plenary session to rule on Moraes’ order, upholding it by a vote of 5-0 in the Court’s 1st working group.

Justifying his vote, Minister Flavio Dino stated that a foreign company cannot operate in national territory “and expect to impose its own view on which laws it believes are valid or should be enforced […] Economic power and the size of a bank account do not grant immunity from jurisdiction.”

The Court has made it clear that X can reopen in Brazil by complying with the nation’s laws. Whether Musk will do that is another story. On Monday, September 2, Brazilian news outlets reported that Musk sought help from the Biden administration’s U.S. Embassy in Brasília to develop a strategy to overturn the Supreme Court ruling.

Racial inequality among the working poor shrinks in America

Andrea Peters

In July a team of researchers from a Harvard-affiliated research institute and the US Census Bureau released a study on economic mobility in the United States. The results, published in the article, “Changing Opportunity: Sociological Mechanisms for Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility,” are a blow to the claim that racial inequality is the overriding feature of modern life.

People ride their bikes past a homeless encampment set up along the boardwalk in the Venice neighborhood of Los Angeles. [AP Photo/Jae C. Hong]

Using data drawn from multiple census years, federal income tax returns and the Social Security Administration, the researchers analyzed information from about 57 million children born between 1978 and 1992 and their parents. The scholars conclude that a key indicator of class inequality shows that racial gaps between poor, working class blacks and whites are falling. Meanwhile, class gaps are growing among whites.

The study focuses on the degree to which children and the generations of which they are a part see an improvement or a decline in their socioeconomic position relative to that of their parents and previous generations.

Before outlining in greater detail the findings of the Harvard-Census Bureau research team, it is essential to point out that, through no fault of their own, they rely on the racial groups identified by the US government in its decennial count of the population. Race, however, is not biologically real, but rather a social construct. There are no genetic or physical traits that all people from one alleged race have and which no one from another race does not have.

On the US Census, racial categories change from one year to the next. They are also restrictive and require people to choose an identity irrespective of the complex, ever-shifting historical and social reality surrounding the issue of race in America, which has become even more complicated as intermarriage rates rise and immigration changes the country’s demographics.

For example, only starting in the year 2000 have people been able to choose more than one race on the census. Latino is not a category at all. Individuals wishing to identify with such a heritage can indicate an ethnicity of Hispanic, but must also choose a racial group. People of Middle Eastern descent have no option to identify themselves exclusively as such. They have to decide between white, black, American Indian or Alaska Native, or one or another variety of sub-groups of the Asian population. These include Japanese, Chinese, Filipino and others, but no one geographically near to the Middle East. “Some other race” is a choice for everyone, and it comes with a request to then write in something more specific. That option, however, has appeared, disappeared and then reappeared over different censuses. In 2014, a study by the Pew Research Center reported that millions of Americans choose different racial categories for themselves from one census year to the next.

Images of the 2020 US Census survey with questions focused on race/ethnicity. [Photo: US Census Bureua ]

Thus, all research that analyzes racial inequalities has to be understood as limited in some sense. The organization of data into facts that allegedly apply to “whites” versus facts that allegedly apply to “blacks,” while necessary for statistical research and useful in understanding social inequalities, rests upon and can reinforce ideas of permanent racial identity that are, at their core, false. Race is not the same thing as class, which is an objective category that necessarily emerges out of the economic system and is the ultimate determinant under the capitalist social order.

But inasmuch as oppression along the “color line” is a major fact of American history and American capitalism, a critical study of racial inequalities is necessary. The danger in doing so emerges when an honest study of social reality is transformed into a subjective search for categories of identity so that people can be targeted for persecution (i.e., the Japanese immigrants and their descendants in America during World War II, the Jews in Germany under the Nazis) or, on the flip-side, showered with privileges. The wish, for instance, of Nikole Hannah-Jones, the racialist creator of the 1619 Project, to create a new racial category for “Descendants of American Slavery” has nothing to do with trying to understand the conditions of a sub-population and everything to do with making sure she and her social layer get more money.

The study led by Harvard economist and Distinguished Professor Raj Chetty is free of both of these maladies. It examines how the economic prospects of children from low-income versus high-income families have changed over recent years. They define low-income families as those at the 25th percentile of the national income distribution, which in 1992 were households with an average (median) income of $32,020. High-income families are those in the 75th percentile of the national income distribution, with a (median) household income in 1992 of $124,500. Thus, the study does not address inequality between the working poor and the truly rich. A family surviving on just over $30,000 lives in a state of absolute deprivation. A family making four times that much, however, which might include a teacher nearing retirement and a veteran autoworker, is not in the lap of luxury. While more secure than the impoverished majority and generally able to afford necessities, such households are often one major medical bill, or one job loss, away from crisis.

Working with these definitions, the researchers find that economic mobility has changed rapidly in the last 15 years. “Between 1978 and 1992,” note the authors, “household incomes in adulthood fell sharply for white children growing up in low-income families. At the same time, incomes increased for white children growing up in high-income families.” The gap in average earnings between adults born into poorer white families and those born into better-off white families in 1978 was $17,720. By the time those born in 1992 were 27 years old, that number had grown to $20,950. The cause of this increasing gap was primarily that whites from households toward the bottom saw their incomes decline during that period.

At the same time, “white-Black race gaps for low-income families shrank: the gap in average household incomes between white and Black children raised in low-income families fell by 28%, from $20,810 for children born in 1978 to $14,910 for children born in 1992.”

The lessening of this divide was driven by two factors. First, there has been some improvement for blacks born into the bottom rungs of society, with many escaping the depths of poverty as they entered their late 20s. In 1978, black children born into the bottom income quintile (the lowest 20 percent of income earners) were 14.7 percentage points more likely to remain in that quintile than their white counterparts. By 1992, however, that number had shrunk to 4.1 points. Second, the worsening situation for low-income white children also helped close the gap. About half of the narrowing of the white-black divide among the working poor was driven by “an increase in white children’s chances of remaining in the bottom quintile.” In short, the experience of being born poor and then remaining poor into adulthood is increasingly shared across the racial divide.

Simultaneously, the chances of a low-income child, from either a black or a white family, becoming a high-earner did not improve at all. Just 3 percent of black children born in 1992 into the bottom income quintile moved into the top quintile, the same number as in 1978. During this period, the prospects for white children worsened somewhat along the same measure. Whereas in 1978, 13.7 percent of those born into low-income families could expect to enter the ranks of the best-off, by 1992 that had fallen to 11.9 percent. Simultaneously, children from high-income Black households experienced some upward mobility, such that “the class gap among Black families …remained essentially unchanged.”

Chances of child from a low-income (bottom quintile) household becoming a high-income (top quintile) household, by race and birth cohort. Chart shows that upward mobility has stagnated for poor blacks and declined for poor whites. [Photo: “Changing Opportunity Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility.” Figure II. Panel B. Page 86.]

Thus, while the circumstances facing working class poor families of both races are converging, the bottom layer of African-Americans has not, after decades of racially based affirmative action policies that were billed as the solution to oppression, seen any progress in terms of closing the class gap between themselves and higher-income layers within their own racial group.

The researchers also found that the pattern of decreasing racial differences and increasing class differences was replicated across other major indicators of social well-being, including educational attainment and standardized test scores, as well as marriage, incarceration and mortality rates. “For example, the white class gap in early adulthood mortality more than doubled between the 1978 and 1992 birth cohorts, while the white-Black race gap in early adulthood mortality decreased by 77 percent.”

Incarceration rates are also leveling out between low-income members of these groups. By 2014, the incarceration rate for poorer whites had risen to 1.43 percent, up from 1.16 percent in 2000. During that same period, it fell for blacks of the same income strata from 4.53 percent to 4.28 percent. This poor layer of African-Americans has an incarceration rate that is more than double that of higher-income blacks.

In seeking the cause of these shifts, the study shows that parental employment rates within communities powerfully shape kids’ future economic mobility. The researchers insist that the issue is not so much whether any particular individual child’s parents are employed, but whether the parents of those with whom these children interact at their schools, in their neighborhoods, through their social networks, etc., have jobs. When those adults do not, it is damaging to children, not just, or even primarily, in terms of the overall amount of money that a community has (or no longer has), but in terms of the overall health of the social environment. To underscore their point, Chetty and his co-authors quote from sociologist William Julius Wilson’s 1996 book When Work Disappears: The World of New Urban Poor—“crime, family dissolution, welfare, low levels of social organization, and so on … are fundamentally a consequence of the disappearance of work.”

The researchers conclude that “the growth in the white class gap and the reduction in the white-Black race gap can be explained almost entirely by the sharp fall in employment rates for low-income white parents relative to low-income Black parents and high-income white parents over the period we study.”

In communities that are more racially mixed, where there are higher rates of interracial marriage and children are interacting more with peers across racial boundaries, falling employment rates among low-income whites have a negative impact on all children’s future economic prospects within the community, regardless of race. At the same time, however, “The areas in which outcomes of children born to low-income Black families improved the most tend to be areas in which outcomes of children born to low-income white families deteriorated the least.” Therefore, “the gains for children born to low-income Black families did not come directly at the expense of their white counterparts in the same areas.”

In other words, the data indicate that securing and improving the job prospects of all working class people—not doling out opportunities to this or that person on the basis of their perceived skin color—will help the conditions of oppressed minorities improve.

In the conclusion of their study, Chetty and his co-authors make a point that is a rebuke, albeit extremely timid, to racialists’ claims that minorities must self-segregate in order to shield themselves from their white oppressors. Rather, “One approach to increasing opportunity is … to increase connections between communities. For example, policies might focus on reducing racial and income segregation—e.g., by changing zoning restrictions, school district boundaries, or increasing the availability of affordable housing in high-opportunity areas—and fostering cross-race and cross-class interactions—e.g., forming groups designed to cut across existing lines of interaction.”

This is hardly a radical proposal. It is the sort of thing that American liberalism of a different era would have put forward as a rule. But in the present circumstances, with American democracy in its death throes, the idea that the breaking down of racial boundaries is the road to progress appears almost as a radical notion. It is rejected, in different forms, by both the Democrats and Republicans. The myopic component of the authors’ proposed policy solution lies not in the racial element, but in the class element. Capitalist society, which rests upon class inequality, cannot produce “cross-class interactions,” but rather intensified cross-class exploitation.

Critics of this study will point to the fact that, despite the trend towards lessening racial inequality among low-income households, there remain notable racial differences in terms of median incomes, chances for upward mobility and risks of downward mobility, incarceration rates, etc. Many points can be made about these facts and the underlying data, not the least of which is that averages and probabilities only reveal so much. They are, not infrequently, a great mystifier of social reality.

Beyond that, the racial gaps for working class people are dwarfed many times over by the class gaps between workers of all backgrounds and the rich of all colors. And with regards to this specific study, the researchers were not able to investigate the experience of truly wealthy populations—both black and white—because they had to “top-code” incomes above $1 million. This statistical method, leveling down the stratospheric income and wealth figures of the super-rich to make calculations possible, limits understanding of the full dimensions of economic inequality.

More broadly, however, the fact that certain racial inequalities persist and that the burdens of deprivation fall more heavily on or, rather, have particular features for some racial groups more than others, is hardly a surprise. For all the great battles waged by working people of all races against inequality and despite major conquests and cultural changes, American capitalism could never and will never resolve this problem.

Israeli Treatment of Palestinians Remains Unchanged Over 75 Years

Melvin A. Goodman

Netzah Yehuda training exercise. Photograph Source: יעסיעס – CC BY-SA 4.0

The Biden administration’s decision to continue funding the notorious Netzah Yehuda battalion, an ultra-Orthodox unit that operates on the West Bank, is the latest indication that the United States is unwilling to take any steps to counter Israel’s genocidal campaign against the Palestinians.  The funding of the battalion marks a major defeat for the human rights experts in the Departments of State and Defense, who argued that Netzah Yehuda should be barred from receiving U.S. support.  This marks one more decision by Secretary of State Antony Blinken that ignores the need for accountability with regard to the barbarous actions of the Israeli Defense Forces.

The Netzah Yehuda battalion is particularly violent in dealing with the Palestinian community. The battallion has killed unarmed civilians and suspects in custody as well as committed sexual assault and torture.  it has attracted many members of an extreme religious-nationalist settler group infamous for establishing illegal outposts on Palestinian land that have no legal basis in Israeli law. In recent years, the Netzah Yehuda battalion has been involved in at least a half-dozen controversial cases involving its soldiers, resulting in jail time, discharge, or harsh criticism for assaulting or killing innocent Palestinians.

U.S. funding of the battalion is a violation of the Leahy Law, passed in 1997, that prohibits the Departments of State and Defense from providing military assistance to foreign security force units that violate human rights.   U.S. embassies and the appropriate regional bureaus of the Department of State vet potential recipients of security assistance.  If a unit is found to have been credibly implicated in a serious abuse of human rights, assistance is denied until the host nation government takes effective steps to bring the responsible persons within the unit to justice.  As a result, security forces and national defense units in Bangladesh, Bolivia, Columbia, Guatemala, and Mexico have been denied assistance in the past.  The United States, of course, plays by different rules when it comes to military support for Israel.

Even before Blinken made his unfortunate decision regarding the battalion, Prime Minister Benjamin Netanyahu obnoxiously proclaimed that “if anyone thinks they can impose sanctions  on a unit of the IDF—I will fight it with all my strength.”  U.S. presidents have been unwilling to stand up to Netanyahu who has led six of the eleven different Israeli governments over the past 28 years.  This funding decision is particularly reprehensible because the battalion was responsible for the death of a 78-year-old American citizen whose stress-induced heart attack was brought on by being bound, gagged, and left on the ground by Israeli forces.  Netanyahu’s government prosecuted no one in this case.

One of the more feckless U.S. moves regarding the war in Gaza was President Biden’s decision  to deliver humanitarian aid to the Palestinians via a floating military pier.  U.S. officials in the Departments of State and Defense argued that the weather conditions in the Mediterranean would compromise any effort to make the pier workable.  The critics were right.  They wanted the Biden administration to put pressure on Israel to open land crossings for aid, but Biden refused to do so.  As a result, the pier was attached to Gaza’s coast line in May and abandoned in July.  

Israeli officials maintain that they are allowing aid into Gaza, but the aid is going in slowly and humanitarian conveys are still being attacked.  A UN vehicle, clearly marked, was attacked several days ago and Palestinian aid workers were killed.  Meanwhile, more than 560 schools in Gaza have been hit or destroyed, and numerous shelters have been attacked.  This points to the moral squalor of Israeli public declarations that deny the targeting of humanitarian missions.

In order to understand the Arab-Israeli conflict (and perhaps appreciate U.S. complicity), it helps to remember the first Israeli edicts against its Palestinian population more than 75 years ago.  With the creation of the state of Israel, the Knesset adopted the British Defense Regulations that enabled Israeli military authorities to close off the Arab areas and restrict entry and exit only to those with permits.  Every Arab inhabitant had to apply to the military government office or to the police in his/her district to obtain a permit to leave his/her village for whatever reason.

The Knesset added its own restrictions to the British regulations.  These enabled the Israelis to deport people from their towns or villages and to summon any person to present himself at a police station or to remain confined to his/her house.  Any Arab could be placed under administrative arrest for an unlimited time, without explanation and without trial.  Violators were tried by military courts and not civilian ones; this is still true today on the West Bank.  Tom Segev, one of Israel’s most distinguished historians, noted in his important book, “1949: The First Israelis,” that “among the soldiers and officers sent to rule over the Arabs were ones who had been found unfit for active service.”  They were vengeful, which is true today on the West Bank.  Segev is associated with Israel’s New Historians, a group challenging many of the country’s traditional narratives.

Another distinguished Israeli historian, Ilan Pappe, recorded in his book, “Ten Myths About Israel,” that the discussion of the forced transfer of the Arab population in Palestine began even before Israel received its independence in 1948.  The discussions evolved into a master plan for the massive expulsion of Palestinians, which was known as Plan Delat.  Pappe notes that the Israeli Foreign Ministry created the myth that the Palestinians became refugees because their leaders told them to leave Palestine before the “Arab armies invaded and kicked out the Jews.”

The continued violence in Gaza and the renewed violence on the West Bank points to a dark future for the Middle East, particularly for Israel, Lebanon, and the Palestinian community.  Israel has become increasingly isolated in the international community, and the ultra nationalism of the right wing is increasingly dominating Israeli politics.  For the past thirty years, the Israelis have hidden behind false gestures of support for a two-state solution and now the possibility of a cease fire in Gaza in order to maintain military and economic support from the United States.  Sadly, it is working, and Israel shows no interest in pursuing any alternative to an endless war.

Latest economic data put question mark over China’s growth target

Nick Beams

Doubts are beginning to be raised about whether the Chinese economy will be able to reach its official growth target of 5 percent for this year as factory activity continues to fall.

A municipal worker rides past a construction site in Beijing, July 25, 2024. [AP Photo/Ng Han Guan]

August saw the fourth consecutive monthly contraction as the purchasing managers’ index (PMI) issued by the National Bureau of Statistics (NBS) dropped to 49.1 from 49.4 (below 50 indicates contraction). The August result was below expectations, with Bloomberg forecasting 49.5.

The latest figures were not a one-off, or even a recent phenomenon, but part of a longer trend. The reading has been below 50 for all but three months in the period since April 2023. There was a small rise after China lifted COVID restrictions at the end of 2022—at the cost of at least one million deaths—but since then it has been very much downhill.

Other data showed that beneath the headline inflation, deflationary pressures were at work. According to analysis by Goldman Sachs economists, both input and output price sub-indexes fell. “Price indicators in the NBS manufacturing survey suggest deflationary pressures picked up significantly,” they said.

The worsening situation in manufacturing is being compounded by the fall in the housing and property sector, which has been a mainstay of the Chinese economy for more than a decade.

According to preliminary data from the China Real Estate Information Corp, reported by Bloomberg, the value of new-home sales in August from the 100 largest real estate companies fell by 26.8 percent from a year earlier, compared to a 19.7 percent decline in July.

The decline in the housing market is having a significant effect on the budgets of local governments. Goldman Sachs economists have warned that revenues from taxes and land sales will fall short of projections unless there is significant intervention by government authorities. But there is little sign of that happening with the measures undertaken so far described as insufficient.

The Wall Street Journal reported that the “festering crisis” in real estate, now into its third year, “has yet to bottom out and remains a major headache” despite some rescue efforts.

The worsening economic outlook has led to a slew of predictions that China will not meet its growth target of 5 percent this year unless there is a major intervention by the government.

Bloomberg economists said: “Looking forward, the economy will need more policy support to pull out of its extended period of weakness. Two months of weak PMI readings so far this quarter, including the latest downward surprise in the manufacturing gauge, bode poorly for the economy.”

An analysis by Goldman Sachs stated that “more fiscal easing is necessary to help secure the ‘around 5 percent’ fill-year growth target.”

Economists at the Swiss Bank UBS have predicted the economy will grow by 4.6 percent this year and 4 percent in 2025. This compares with previous forecasts of 4.9 percent and 4.6 percent respectively.

Economists at Barclays bank have taken a slightly different approach, examining tax revenue collections which they believe provide a more accurate assessment of the state of the economy than growth numbers. Their conclusion is that the situation could be more serious than growth figures indicate.

According to their findings, reported in the Wall Street Journal, the tax revenue from corporate incomes dropped by 5.4 percent in the first seven months of the year, with the fall reflected in a lowering of profit margins for companies.

“With weaker domestic demand exacerbating overcapacity issues, price wars or price cuts are becoming more widespread across industries” amid “fierce competition.”

“Falling profits will likely lead to pay cuts and layoffs, boding ill for consumption,” they said.

These gloomier views are countered by government representatives. In a video message, the Chinese finance minister Lan Fo’an emphasised the government was very much in control.

“Looking forward, China’s economic development has multiple advantages and macro control policies will continue,” he said, describing the performance of the economy in the first half of the years as “generally stable and progressing steadily.”

Lan was speaking from Cape Town, South Africa where he was attending a meeting to establish a New Development Bank sponsored by the BRICS group of countries.

There is no question that the actions of the Chinese state can play a powerful role in determining the direction of the economy. But the objective laws and contradictions of the global capitalist economy are even more powerful, and they are starting to make themselves felt.

The government is not able to resort to the major stimulus measures as in the past because it fears this will only create a debt crisis and destabilise the financial system. There are already concerns in this area.

The slowdown in the Chinese economy and the lack of profitable investment opportunities has already led to a move into government bonds, pushing up their price and sending their yields, or interest rate down. (The two have an inverse relationship.)

The People’s Bank of China is trying to halt these moves because of fears of a bond market bubble that could collapse in the wake of the issuing of more government debt. This would push down the price of bonds, raising their yields which would mean that banks, which had invested heavily in government debt, would incur significant losses.

The concern is that such banks could be placed in a similar situation to the American Silicon Valley Bank which went under in the March 2023 as a result of significant losses on its Treasury bonds.

The Chinese government’s general plan is to try to expand its way out of the slowdown by increasing exports through the development of high-tech products and basic industrial goods, in particular steel. But it is running into rising tariff walls and protectionist measures.

Protectionism is certain to be intensified in conditions of a slower global economy, including in the US.

Then there is the issue of what policies will be adopted to specifically target China by whoever wins the US presidential election. Trump has said he will increase tariffs on all Chinese imports by 60 percent while Harris’s policies will show no letup in the anti-Chinese measures enacted under Biden.

The continued slowdown, as exemplified in the most recent data, has led to the widespread view that the 5 percent growth target is out of reach. They were summed up by Wang Yan, a strategist at the global investment firm Alpine Macro, who said it was “almost impossible” to achieve.

Wang commented that Chinese policymakers appeared to be “paralysed” and lacked a coherent strategy with the piecemeal measures they had employed to so far being ad hoc and hesitant. He warned of a “slow implosion” in the period ahead.

The great fear of the ruling Chinese oligarchy if that if such a development does take place then it could lead to an explosion of class and social struggles. The political stability of the regime has largely rested on its capacity to deliver economic expansion and jobs.