Wages fall and poverty rises in Russia as government axes services

David Levine

The Russian Ministry of Finance has announced it expects that the country’s economy will contract by 2.5 percent in 2015. Russia’s ruling elite intends to force the working class to pay for the recession.

President Vladimir Putin signaled this on April 27 when he declared to a meeting of the Council of Legislators that one of the causes of the downturn was the fact that recent wage growth exceeded the growth of labor productivity. According to Putin, this, as well as budgetary imbalances caused by the decline in oil prices and state income, must be corrected by slashing expenditures.

In fact, when inflation is taken into account, wages have declined in Russia, falling by 13.2 percent between April of this year and the same month last year. This is the sharpest drop since 1999. Deputy Minister of Labor Lyubov Yeltsova announced in May that her ministry expects a 9.8 percent fall in real wages in Russia in 2015 and does not expect growth in real wages until 2018.

Inflation, which the Central Bank expects to be 12 to 14 percent for the year, is eating away at the population’s earnings. In Moscow, for instance, the authorities are hiking housing utility costs by an average of 10 percent starting July 1.

Official poverty is on the rise in Russia. According to data published last week by the Russian Federal State Statistics Service (FSSS), the number of Russians with incomes below the minimum subsistence level grew by 15.6 percent between the first quarter of 2014 and the first quarter of 2015. They now make up 15.9 percent of the country’s population.

Professor Tatyana Maleva of the Higher School of Economics explained to the online newspaper Gazeta.ru that the so-called minimum subsistence level does not provide an accurate measurement of hardship because it does not take fully into account inflation in the cost of medicine.

In addition, the published poverty figures do not include the territories of Crimea and Sevastopol, which Russia annexed from Ukraine in 2014. Crimea, according to figures published in April in the newspaper RBC, is the poorest Russian region, with the lowest ratio of average wages to the minimum subsistence level of the 85 Russian regions. Sevastopol ranked 82nd on the same list.

According to the World Bank’s Global Monitoring Report 2014/2015: Ending Poverty and Sharing Prosperity, approximately 45 percent of the Russian population lived on less than $10 per day in 2014.

At the same time as indices of hardship mount, a report by the Accounts Chamber of the Russian Federation published in April reveals the devastating impact of the Kremlin's 2012 “optimization” policies, which were ostensibly aimed at improving social conditions. Instead, the government acknowledges that the measures have “led to a decline in the accessibility of services and a worsening of the results of federal and local government organizations” and “a deterioration of the quality of life of the population.”

In addition to causing a crisis in public health, “optimization” has led to the closure of hundreds of libraries and thousands of community recreation centers, with many more closures slated for 2015. The number of libraries in the country is less than 20 percent of the regulatory minimum. Federal, regional, and local cultural institutions cut a total of 81,499 staff in 2014, or 12.2 percent of the total.

The year 2014 saw the closure of 592 educational institutions and reorganization of 2,030 more. Eight hundred and seventy more schools are to be shuttered before 2018, although statistical predictions estimate that there will be 2.5 million more school students by 2020-21.

Despite a recent upturn in Russia’s birth rate, which President Putin and his supporters frequently cite as a sign of their achievements, between 2015 and 2018, 5.6 percent of preschools are to be shuttered, as are 6 percent of primary and secondary schools, 3.6 percent of extended education schools, 16.1 percent of vocational schools, and 14.7 percent of orphanages and other institutions for children without parents or guardians.

Conditions have continued to deteriorate in rural Russia. The Accounts Chamber report found that 9,500 towns with a population between 300 and 1,500 have no preschool facilities, and 877 towns are located over 25 kilometers from the nearest preschool. One-third of these towns have no public transportation. Nearly 6,000 towns with a population between 300 and 1,500 have no primary or secondary schools.

According to government target figures, the percentage of children and young adults age 5-18 in school or professional education should be 99 percent, but the actual number is much below that level and has been falling. In Stavropol Krai, this indicator stands at 55.3 percent in urban areas and 5.16 percent in rural areas. In Voronezh Oblast, it is 53.5 percent in urban areas and 23 percent in rural areas.

There were overall cuts of 18,800 educational workers in Russia in 2014. Of those who lost their jobs, barely more than half have found new jobs.

Accounts Chamber auditor Aleksandr Filipenko noted that many educators work multiple jobs. “For example, an educator at a vocational school will have 1,500 and more hours of instruction per year, instead of the standard 720 hours,” he observed.

The total number of social service agency employees in the country was cut in 2014 by 6.5 percent. The pace of job cuts will rise in the coming years, with reductions set to affect 33 regions of the country. The cuts will be accompanied by an increased workload for those workers who remain. The average wage for a social worker in Russia is just $355 a month.

Some 3,500 protesters gathered in Moscow on June 6 with demands for increased funding for scientific research and education, self-governance, autonomy in education and science, and respect for academic freedoms.

Contract covering 16,500 General Electric workers to expire June 21

John Marion

Contract talks between General Electric and an umbrella group of unions representing approximately 16,500 workers began June 1 in New York. The current 4-year national agreement expires June 21, but contains a clause extending its term for another year if no agreement is reached.

The National Agreement is a general contract containing language allowing for local differences in wage increases, observed holidays, layoff and retraining procedures, work schedules, and other conditions. It covers workers in GE service centers, aviation plants, locomotive manufacturing facilities, power and water operations at 37 GE locations in 19 states.

The Coordinated Bargaining Committee is an umbrella group of 11 unions, including GE-IUE/CWA, AFL-CIO, and CLC locals.

The entire negotiation has taken place behind the backs of GE workers. The secretive nature of the discussions indicates that the union has no intention of seriously fighting the company’s constant demands for wage and benefits concessions by employees.

The last nationwide strike by GE workers, against the company’s attempts to burden them with increasing health insurance costs, took place in January 2003.

While the first two weeks of this year’s negotiations occurred at the “big table” and included management presentations comparing GE’s benefits to those of other companies, this week’s sessions will address details through subcommittees for Pension/Insurance, Contract Language, and other bargaining.

With good reason, workers are concerned that attacks made in recent years on the retirement benefits of salaried, non-union employees will be forced onto unionized workers as well. The company announced in September 2014 that after January 1, 2015 it would no longer provide supplemental Medicare coverage to non-union retirees. This cut, which affects more than 50,000 existing retirees, will save GE $832 million.

In his opening remarks, Jim Clark, the chair of the Coordinated Bargaining Committee, went out of his way to kowtow before GE, praising the company’s lead negotiator as “a gentleman and a professional.”

The unions agreed to major benefit cuts in the 2011 contract negotiations, including a health insurance program called Wage Works, which has required some workers to drive as far as 30 miles for prescription refills. As of January 1, 2012 new hires have not been eligible for the defined benefit pension plan, being forced instead into a 401(k)-like defined contribution plan.

The unions are hinting, in deliberately vague language, that the current round of negotiations will aim to reverse these concessions, but, given the union’s record, no one should take such claims seriously.

GE is notorious for the lengths it will go to in order to expand its profits. According to Citizens for Tax Justice, from 2010 to 2014 the corporation received US federal tax refunds of $1.4 billion despite making $33.5 billion in profits. The refunds result from tax loopholes governing carry forwards in income statements along with losses in GE subsidiaries that were created solely to take advantage of the loophole. The company also keeps more than $100 billion in offshore assets to avoid US taxes.

GE is holding more than $13 billion in cash and cash equivalents, and almost $400 billion in current assets that are slightly less liquid. In 2014 its profits were more than $15 billion. CEO Jeffrey Immelt is the chair of President Barack Obama’s Council on Jobs and Competitiveness.

GE’s corporate headquarters are located in Fairfield, Connecticut, and employ about 800 people. The company has more than 5,700 employees in the state. At the beginning of June the Connecticut state legislature passed a 2-year budget including $1.2 billion in tax increases. Corporate taxes currently contribute only 6 percent of Connecticut’s total tax revenue, down from 17 percent in 1990.

The tax increases included changes in loss carryforward reporting and the implementation of “unitary reporting” for corporations that earn profits in more than one state. According to the Hartford Courant, total corporate taxes in Connecticut would increase by $70 million from these changes, of which GE would pay $3 to $5 million.

Immelt reacted by threatening to move GE’s headquarters out of Connecticut. The Courant reported that GE workers had called state representative Peter Tercyak of New Britain, along with other state legislators, to report that GE had in fact signed new leases in New York months before the new taxes were passed. In other words, it will be moving some operations regardless. A state senate leader has accused GE of using the tax increase as an excuse to hide layoffs it was already planning.

UK government, Murdoch press smear of Edward Snowden unravels

Chris Marsden

A press attack on National Security Agency whistleblower Edward Snowden has backfired on the UK government.

This weekend’s Sunday Times ran an article under the headline, “British spies betrayed to Russians and Chinese,” citing numerous anonymous sources from within the government and security services.

The sources once again painted a picture of Edward Snowden having endangered the lives of spies and informants, jeopardising state operations. The Times article was replete with unfounded assertions, distortions and outright lies.

Both Russia and China were said to “have cracked the top-secret cache of files stolen by the fugitive US whistleblower Edward Snowden, forcing MI6 to pull agents out of live operations in hostile countries, according to senior officials in Downing Street, the Home Office and the security services.”

Moscow was supposed to have “gained access to more than 1m classified files,” after Snowden “fled to seek protection from Vladimir Putin, the Russian president.”

“Senior government sources” then “confirmed that China had also cracked the encrypted documents.”

A “senior Home Office source” accused Snowden of having “blood on his hands”, “although,” the Sunday Times immediately added, “Downing Street said there was ‘no evidence of anyone being harmed’.”

The only named source, Sir David Omand, the former director of GCHQ, called Russia and China’s supposed de-encryption of Snowden’s files a “huge strategic setback” that was “harming” to Britain, America and their NATO allies.

The Sunday Times claimed that a comment made by a “senior Downing Street source,” i.e., from the prime minister’s office, “that Russians and Chinese have information,” represented irrefutable proof of the veracity of the claims. It was, moreover, “the first evidence that Snowden’s disclosures have exacted a human toll”.

This was followed by another “senior Home Office source” declaring, “Why do you think Snowden ended up in Russia? Putin didn’t give him asylum for nothing. His documents were encrypted but they weren’t completely secure and we have now seen our agents and assets being targeted.”

All of which goes to prove the old adage, “If you tell a lie, tell a big one and stick to it.”

Glenn Greenwald, who worked closely with Snowden, issued a devastating rebuttal of the Sunday Times, noting, “The whole article does literally nothing other than quote anonymous British officials,” while offering “zero evidence or confirmation for any of its claims.”

He noted several particularly glaring falsehoods: When Snowden left Hong Kong, he took no files with him, having given them to the journalists with whom he worked, and then destroying his copy so that it wouldn’t be vulnerable as he travelled. “How, then, could Russia have obtained Snowden’s files as the story claims—‘his documents were encrypted but they weren’t completely secure’—if he did not even have physical possession of them?”

The Sunday Times states that David Miranda, cynically referred to as “the boyfriend of the Guardian journalist Glenn Greenwald”, was “seized at Heathrow in 2013 while in possession of 58,000 ‘highly classified’ intelligence documents after visiting Snowden in Moscow.” Greenwald counters that Miranda “had never been to Moscow and had never met Snowden. … TheSunday Times ‘journalists’ printed an outright fabrication in order to support their key point: that Snowden had files with him in Moscow. This is the only ‘fact’ included in their story that suggests Snowden had files with him when he left Hong Kong, and it’s completely, demonstrably false…”

The claim that the Russian and Chinese governments learned the names of covert agents by cracking the Snowden file, “forcing MI6 to pull agents out of live operations in hostile countries,” he adds, “appears quite clearly to be a fabrication by the Sunday Times … [because] not even the anonymous officials claim that Russia and China hacked the entire archive, instead offering only vague assertions that Russian and China ‘have information’.”

Greenwald ends by noting, “The Sunday Times has now quietly deleted one of the central, glaring lies in its story: that David Miranda had just met with Snowden in Moscow when he was detained at Heathrow carrying classified documents.” The claim “remains in the print edition and thus requires a retraction.”

Privacy International, Liberty, MPs Tom Watson and David Davies and many others have pointed to the timing of the Sunday Times smear, suggesting that it is a counter to last Thursday’s publication of the official report on UK surveillance laws by David Anderson QC. They have cited in particular its call for judicial rather than ministerial oversight of surveillance.

This lends unwarranted credibility to a report that in fact justifies existing mass collection of phone and Internet data and the extension of such powers providing only that a “detailed operational case” and a “rigorous assessment” of the intrusiveness, effectiveness, cost and legality of extended snooping powers is made by the security services. This is meaningless, no matter what civil liberties groups might believe or suggest.

Anderson also supports the compulsory retention of “third party data” and urges the government to secure the cooperation of Google, Facebook, etc., to this end. He comes out in support of companies handing over encryption keys.

What is of greater concern for both the government and the Murdoch press is the widespread public opposition to mass surveillance, particularly when the intention is to pass the “snoopers’ charter” into law in the autumn.

The Draft Communications Data Bill creates wide-ranging powers to compel any communications service provider to collect and retain information about any organisation that interacts with users and produces or transmits electronic communications, even if this information is irrelevant to their business needs. This information includes Deep Packet Inspection that bypasses encryption software and matching data from different sources to create a central database of communications, behaviours and patterns of activity.

Last week, the Intelligence and Security Committee confirmed that Government Communications Headquarters (GCHQ) is still collecting “bulk personal datasets” from millions of people’s phone and Internet records. Privacy International has launched a legal claim before the Investigatory Powers Tribunal (IPT) calling for this practice to be ended—citing the passing of the USA Freedom Act ostensibly curtailing the bulk collection of phone record metadata. In the UK, this is still legal under the Data Retention and Investigatory Powers Act (DRIPA) passed in 2014.

In addition, last month GCHQ operatives and the police were made exempt from prosecution for hacking under the Computer Misuse Act (1990). The exemption move was first initiated last June, one week after a case taken out at the Investigatory Powers Tribunal by Privacy International and seven Internet and communications service providers, and was included in the Serious Crime Bill 2015. The IPT case focused on the alleged use of hacking tools to download malicious software allowing users’ cameras and microphones to be remotely hijacked.

The smearing of Snowden, like that of WikiLeaks founder Julian Assange, is a vital element in a general effort to create a climate of fear to justify state surveillance and repression. This has long been conducted in the name of combating Islamic terrorism. Now, in line with the predatory aims of British and US imperialism, the threat is said to come from Russia and China.

In all cases, millions of working people in Britain and internationally are identified as “the enemy within”, whose democratic rights are trampled on by a ruling elite hell bent on destroying jobs, wages and vital social services.

Global stock markets fall on fears of Greece debt default

Robert Stevens

Stock markets in Athens and internationally fell sharply Monday following the collapse, at the weekend, of talks on Greece’s debt crisis.

Following the debacle, a European Commission spokesman said a “significant gap” remained between the proposals of the institutions—the European Union, International Monetary Fund, and European Central Bank—and of Greece. He added that “further discussion will now have to take place in the Eurogroup.”

The Eurogroup, a meeting of the euro zone’s finance ministers, holds its monthly meeting on Thursday.

The Athens Stock Exchange fell 720.32 points (7 percent), the biggest drop in five months, closing 4.7 percent down. Shares of Greece’s main banks, which are on the verge of collapse, fell sharply, with Piraeus Bank down 15.57 percent at one stage. The Financial Times said the “looming prospect of capital controls” threatened “to inflict further pain on a banking sector already in dire straits.”

With these losses, the exchange has fallen by more than 40 percent in the space of 12 months.

The breakdown in talks fuelled a rush by savers to withdraw their deposits from the banks, with more than €400 million euros taken out yesterday. This compared with a daily average in April of €220 million, excluding weekends.

Germany’s DAX index closed down 1.8 percent, France’s CAC-40 fell by 1.7 percent, and the UK’s FTSE 100 dropped 1.1 percent, to its lowest level since March. The Italian FTSE MIB plummeted by almost 2.5 percent.

Talks between Greek and EU officials were premised on Athens receiving, in exchange for imposing further spending cuts, an already agreed-upon EU loan of €7.2 billion. In February, Syriza agreed to extend the austerity programme overseeing this agreement until June 30. The EU, ECB and IMF are refusing to give Syriza a single concession, however, insisting instead they carry out a total surrender.

Syriza reportedly agreed in its final proposals to meet harsh primary surpluses targets for 2015 and 2016 that the EU had long demanded. But even this was not enough.

It emerged on Monday, according to a Guardian report based on statements by EU officials, that EU negotiators had refused to even meet with Syriza’s delegation the previous day.

The delegation, including Tsipras’ chief of staff, Nikos Pappas, were humiliated and forced to leave after just 45 minutes. Martin Selmayr, chief of staff to Jean-Claude Juncker, president of the European Commission, approached the delegation and asked if the document they were presenting had the same figures as the previous day. When Selmayr was told it did, he informed the delegation there would be no talks on that basis and sent them packing.

With their perspective of negotiating a settlement with the EU, ECB and IMF in tatters, Syriza spokesman Gabriel Sakellaridis said on Monday, "We have largely exhausted our limits.”

Tsipras said in a statement, “One can only suspect political motives behind the fact that [the institutions] insist on further pension cuts, despite five years of pillaging.”

With the expiry of the austerity programme just weeks away and Greece’s economy drained of cash and deprived of any external source of funding, the weekends’ events demonstrate that the EU powers will brook no opposition to their policy of continent-wide austerity, in which Athens is the test case.

Speaking to Kathemerini, one euro zone official said Monday. “No more new proposals; take it or leave it time is upon us, I think. Or very close.”

Commenting in the Guardian, Seamus Milne recently noted, “What’s become clear in recent weeks is that the masters of the eurozone are not even prepared to provide Tsipras with a fig leaf. From the Brussels perspective, Greece must cave and be seen to cave.”

One of their main aims is the dismantling in Greece of what Annika Breidthardt, the EU commission’s economics spokesperson, denounced as “one of the most expensive pension systems in Europe.”

Syriza, fearful of opposition in the working class, has committed only to certain pension cuts, mainly to limit early retirement. However, these are a tiny fraction of what the EU is demanding. Syriza’s proposal would cut pension spending by €78 million euros (0.04 percent of GDP). The EU wants the retirement age raised and a pension spending cut of €1.8 billion annually (1 percent of GDP per year). This implies a staggering 20 percent cut in income for pensioners.

IMF chief economist Olivier Blanchard blogged, “Why insist on pensions? Pensions and wages account for about 75 percent of primary spending; the other 25 percent have already been cut to the bone. … Just as there is a limit to what Greece can do, there is a limit to how much financing and debt relief official creditors are willing and realistically able to provide given that they have their own taxpayers to consider.”

Such edicts are proof that the global financial elite will stop at nothing in continuing the sociocide they have inflicted on the Greek population over the last five years. More than €60 billion in overall cuts has been enforced, with average pensions already slashed by up to 50 percent.

Syriza also proposed to counter any pension spending cuts by cutting €200 million from the military budget. With Greece a key member of NATO, which is escalating its encirclement of Russia, such measures would also be intolerable.

The Syriza government has maintained its relations with Russia. On Thursday, as the Eurogroup meets, Tsipras is scheduled to begin a three-day visit to Moscow. He will meet Russian President Vladimir Putin and attend an economic forum in Saint Petersburg.

Greece defaulting on its immediate due debts, including €1.6 billion due to the IMF this month, brings the real possibility of a default on its overall sovereign debt of €320 billion and a forced exit (“Grexit”) from the euro zone.

In the last days, a number of senior figures have warned the euro zone now faces an existential threat. On Monday, testifying before the European Parliament’s Economic and Monetary Affairs committee, ECB President Mario Draghi said if Greece defaulted, “we will enter into uncharted waters.”

Just hours before French President François Hollande cautioned that “turbulent” times were looming “if we don’t reach an agreement.”

On Monday Guenther Oettinger, Germany's EU Commissioner and a senior member of Chancellor Merkel’s Christian Democratic Union (CDU), said in the event of a Grexit, “We should work out an emergency plan, because Greece would fall into a state of emergency.”

Global refugee crisis worst since World War II

Joseph Kishore

The global refugee crisis is more dire than at any point since the end of the Second World War, according to a report released yesterday by Amnesty International.

The report provides a partial picture of the disaster produced by global capitalism and the operations of imperialism in different parts of the world, with a focus on Syria, North Africa and the Mediterranean, Southeast Asia and Sub-Saharan Africa.

The Dadaab camp in Kenya now holds nearly 50,000 refugees [Source: UN Refugee Agency]

Tens of millions of people have been forced to flee their homes, traveling great distances in an attempt to escape war, economic devastation and political persecution. Refugees often face deplorable conditions in the countries to which they flee, and with increasing regularity are turned away or perish during the journey.

Amnesty notes that in 2013, for the first time since the 1940s, the number of refugees was estimated at more than 50 million. In the ensuing two years, millions more have become refugees.

The situation in Syria and its neighboring countries in the Middle East is particularly dire. “More than half of Syria’s population is displaced,” including those displaced internally, according to the report. “Some four million women, men and children have fled the country and are refugees, making this one of the biggest refugee crises in history.”

Amnesty castigates the major powers for failing to provide assistance to the surging refugee population, many of whom have ended up in neighboring Lebanon (where 20 percent of the population now consists of Syrian refugees), Jordan and Turkey. It notes that the United Nation humanitarian appeal for $4.5 billion to aid Syrian refugees had reached only 23 percent of its goal by early June.

The entire UN emergency fund for Syrian refugees is less than one percent of the annual budget of the US military.

“The total number of places offered to refugees from Syria is less than 90,000, only 2.2 percent of the refugees in the main host countries (Lebanon, Jordan and Turkey),” the report states. Faced with a surging population and limited funding, the World Food Programme has been forced to reduce its level of food assistance to less than $0.46 a day to Syrian refugees in Jordan and $0.62 a day to refugees in Lebanon.

The desperate situation facing refugees from Syria exposes the “humanitarian” pretenses of imperialist operations in the region. The crisis is a direct result of the US-stoked civil war in the country, which has included the financing of Islamic fundamentalist organizations in the campaign to topple Syrian President Bashar Al-Assad.

The Obama administration is now utilizing the crisis created by American imperialism to justify the expansion of military operations in both Syria and Iraq, ostensibly targeting the Islamic State. The 2003 invasion and occupation of Iraq itself produced millions of refugees.

Amnesty also points to new restrictions on border crossing imposed by Lebanon, Turkey and Jordan, all US allies. Turkey has closed almost all of its border gates to Syria. Over the weekend, Turkish military forces used water cannon against refugees fleeing fighting across the border from the southeastern Turkish town of Akcakale.

The report says nothing about the origins of the crisis. The civil war in Syria is also a main driving force behind the sharp increase in the number of refugees seeking to cross the Mediterranean. Many Syrians have fled to Libya where they, along with refugees from other parts of the Middle East and Africa, face disastrous conditions in a country torn apart by the NATO war in 2011.

Libya is riven by rival Islamist militias, many of which were financed and armed as part of the US-led campaign to overthrow the government of Muammar Gaddafi. Refugees in Libya are subjected to harassment, torture, sexual assault, extortion and forced labor while seeking access to boats to take them across the sea to Italy.

In April, two boats packed with refugees sank in the Mediterranean, killing over 1,200 people. In the first five months of this year, 1,865 people have died attempting the journey, compared to 425 during the same period last year. The report notes that the “dramatic increase in the number of lives lost” is “partly due to the decision by Italy and the European Union (EU) to end the Italian navy operation Mare Nostrum at the end of 2014 and replace it with a much more limited EU operation.”

The response of the European imperialist powers, which backed the war in Libya as part of an attempt to reassert control over their former colonies, has been to strengthen “Fortress Europe” and block the flow of refugees. Last month, the EU agreed to a quota system to house 20,000 refugees, a tiny fraction of those seeking to flee Libya.

At the same time, the European powers are citing the refugee crisis as a rationale to prepare military strikes in Libya itself, aimed in the first instance at destroying the boats used to transport people across the Mediterranean.

A similar disaster has unfolded in Southeast Asia and the Asia Pacific in the first part of 2015, as boats filled with refugees from Myanmar and Bangladesh have been turned away by Indonesia, Malaysia, Thailand and Australia. It is estimated that 300 people have died at sea so far this year due to starvation, dehydration or abuse.

The Amnesty report notes that the initial refusal of governments in the region to accept the refugees was a “flagrant violation of their international obligations.” It states that “Australia’s offshore processing policy—whereby it takes asylum-seekers who attempt to reach Australia by sea to detention centres in Nauru and Manus Island (Papua New Guinea)—is particularly egregious… [T]he deliberately harsh, humiliating conditions at the Australian-run detention facility were designed to pressure asylum seekers to return to their country of origin, regardless of whether or not they were refugees.”

The Australian government of Prime Minister Tony Abbott is currently facing allegations that it has paid people smugglers to take asylum seekers back to Indonesia, allegations that the government has tacitly acknowledged. These illegal actions underscore Australia’s central role in spearheading the persecution of refugees throughout the region.

In Sub-Saharan Africa there is an estimated population of 3 million refugees, the result of waves of people fleeing wars and conflicts in different parts of the continent, including Nigeria, South Sudan, the Central African Republic and Burundi. These wars are invariably connected to struggles over natural resources, with the imperialist powers viewing the deeply impoverished region to be of interest only as a source of oil and minerals.

The Amnesty report’s conclusions are predictable, consisting of impotent calls for governments to do more. “The global refugee crisis will not be solved unless the international community recognizes that it is a global problem and deals with it as such,” the report states.

The catastrophic situation facing refugees, however, is one particularly horrific expression of a bankrupt social and economic system. The surge of refugees is a direct product of unending war and social counterrevolution. The persecution of those uprooted by imperialism is inseparable from the attack on the democratic and social rights of the working class in every country.

Israel’s Race to Economic (and Moral) Bankruptcy

Jonathan Cook

Two recent reports suggest that Israel could face catastrophic consequences if it fails to end the mistreatment of Palestinians under its rule, whether in the occupied territories or in Israel itself.

The Rand Corporation’s research shows that Israel could lose $250 billion over the next decade if it fails to make peace with the Palestinians and violence escalates. Ending the occupation, on the other hand, could bring a dividend of more than $120 billion to the nation’s coffers.

Meanwhile, the Israeli finance ministry predicts an even more dismal future unless Israel reinvents itself. It is likely to be bankrupt within a few decades, the finance ministry report says, because of the rapid growth of two groups who are not productive.

By 2059, half the population will be either ultra-Orthodox Jews, who prefer prayer to work, or members of Israel’s Palestinian minority, most of whom are failed by their separate education system and then excluded from much of the economy.

Both reports should be generating a tidal wave of concern in Israel but have caused barely a ripple. The status quo – of occupation and endemic racism – still seems preferable to most Israelis.

The explanation requires a much deeper analysis than either the Rand Corporation or Israel’s finance ministry appears capable of.

The finance ministry report points out that with a growing population not properly prepared for a modern, global economy, the tax burden is falling increasingly heavily on a shrinking middle class.

The fear is that this will rapidly create a vicious cycle. Wealthier Israelis tend to have second passports. Overwhelmed by the need to make up the revenue shortfall, they will leave, plunging Israel into irreversible debt.

Despite this doomsday scenario, Israel seems far from ready to undertake the urgent restructuring needed to salvage its economy. Zionism, Israel’s official ideology, is predicated on core principles of ethnic separation, Judaisation of territory and Hebrew labour. It has always depended on the marginalisation at best, exclusion at worst, of non-Jews.

Any effort to dismantle the scaffolding of a Jewish state would create a political crisis. Reforms may happen, but they are likely to take place too slowly and incrementally to make much difference.

The Rand report also raises the alarm. It notes that both peoples would benefit from peace, though the incentive is stronger for Palestinians. Integration into the Middle East would see average wages rise by only 5 per cent for Israelis, compared to 36 per cent for Palestinians.

But, while its economists may have found it easy to quantify the benefits of ending the occupation, it is much harder to assess the costs in shekels and dollars.

Over the past six decades, an economic elite has emerged in Israel whose prestige, power and wealth depends on the occupation. Career military officers earn large salaries and retire in their early forties on generous pensions. Nowadays many of these officers live in the settlements.

The army top brass are the ultimate pressure group and will not release their grip on the occupied territories without a fight, one they are well placed to win.

Backing them will be those in the hi-tech sector who have become the engine of the Israeli economy. Many are former soldiers who realised the occupied territories were the ideal laboratory for developing and testing military hardware and software.

Israel’s excellence in weaponry, surveillance systems, containment strategies, biometric data collection, crowd control, and psychological warfare are all marketable. Israeli know-how has become indispensible to the global appetite for “homeland security”.

That expertise was on show this month at a Tel Aviv armaments expo that attracted thousands of security officials from around the world, drawn by the selling point that the systems on offer were “combat proven”.

To end the occupation would be to sacrifice all this and revert to the status of a tiny anonymous state with no resources or notable exports.

And finally the settlers are among the most ideologically committed and entitled sector of Israel’s population. Were they moved out, they would bring their group cohesion and profound resentments back into Israel.

No Israeli leader wants to unleash a civil war that could rip apart the already-fragile sense of unity among the Jewish population.

The reality is that most Israelis’ perception of their national interests, both as a Jewish state and as military superpower, are intimately tied to a permanent occupation and the exclusion of Israel’s Palestinian minority from true citizenship.

If there is a conclusion to be drawn from these two reports it may be a pessimistic one.

Israel’s internal economy is likely to grow gradually weaker, as the ultra-Orthodox and Palestinian labour forces are under-utilised. As a result, the focus of Israel’s economic interests and activity is likely to shift even more towards the occupied territories.

Far from Israelis rethinking their oppressive policies towards the Palestinians, the ideological blinkers imposed by Zionism could push them to pursue the benefits of the occupation even more aggressively.

If the watching world really wants peace, economic wishful thinking will not suffice. It is past the time simply for carrots. Sticks are needed too.

Holding America Hostage

Charles R. Larson

Twice in the past week, parts of our country have been held hostage by the acts of a few individuals, disrupting the lives of thousands of others. The nation has watched the latest in what appear to be a rise in attempts by individuals to take matters into their own hands—the hell with everyone else. In Dannemora, N.Y., two men escaped from a maximum-security prison resulting in hundreds of law-enforcement officials searching for their whereabouts for days, the closing of public schools in the area, the disruption in the lives of thousands of families who were encouraged not to go outside. The result was maximum chaos and huge expense because of the acts of the two escaped killers.

In Dallas (an appropriate venue), a lone gunman, who had purchased an armored vehicle on EBay (which tells us something in and of itself), attacked the police headquarters, shooting the building hundreds of time before fleeing police retaliation. Besides the rounds of ammunition in his vehicle and multiple assault rifles, he also had pipe bombs. Surprisingly, no one besides the attacker was killed in the chase but the disruption to the city was major, all caused by one man who thought he needed to take things into his own hand, though the supposed reason—as subsequently revealed—was a recent custody case involving his son. Both of these incidents, you could say, were caused by unstable loners, misfits. The chaos they caused was not unlike that by recent serial killers, or mass-murderers, going into schools or movie theatres and emptying their assault rifles.

That metaphor, for me, is just about the same as actions caused by our elected leaders in state legislators, by members of congress and the senate, by the supreme court, and lobby groups such as the NRA.  Small groups of people (often unelected officials) have a disproportionate say in the lives of all of the rest of us, creating chaos in our country, destabilizing the lives of everyone. NRA membership in the United States is said to be somewhere around 4.2 million, out of a population of 320 million. So what is that—1.5% of the country are members of the NRA at most? But look at the damage they have done to the nation as a whole with their fanatical views on gun control and assault rifles? The NRA is responsible for thousands of deaths a year. Is this the way a Democracy is supposed to work? The 1.5% will control the other 98.5%. I’ve spent a paragraph talking about something that most journalists and politicians are afraid to mention, let alone confront. If that isn’t a lock on reason in the country, I don’t know what it is.

What about a few hundred congressmen and senators, mostly men, controlling the dialogue and the position on abortion in the United States for decades? How can this make any sense? What kind of congressman or senator has the country created (and tolerated) that permits these men to vote against the wishes of at least half of their constituents? What would happen if the rules regarding abortion in the United States were put to a straight up or down vote, where every American could cast his or her opinion? How many other cultural issues would go down in shame if they could be voted on in a nation-wide referendum? But we don’t do things like that, so a few hundred elected leaders get to make the decisions for everyone—to hell with genuine representation.

Which takes me to the Supreme Court and Citizens United, proclaiming that corporations are individuals and have the right to spend as much money supporting political candidates as they want. If corporations are individuals, shouldn’t they pay the same tax as individuals? The percentage of my income (mostly retirement) that I pay as taxes far outstrips the percentage of that of most corporations in the United States. Ergo, shouldn’t I have the same loopholes and special privileges in my taxes as a corporation? What an absurdity to refer to corporations as individuals. How did five justices on the Supreme Court have the right to destroy the American election system? (Yes, of course, our government was set up with its three separate branches.) Is the assumption that the justices cannot make grievous errors in their decisions? What’s the check and balance? The 2016 election will probably squander  $10 billion dollars. What will the 2020 election throw away? Thirty? Forty? How obtuse do you need to be before you can understand what has happened?

All right, so it’s 4.2 million NRA members who control gun legislation in the United States. A few hundred men (and a few women) who control abortion rights. Five men on the Supreme Court who ruined the election system in the United States. Can this reductio ad absurdum be reduced any further? Unfortunately, yes, to three: the Koch Brothers and Sheldon Adelson. In the past few days there are hints that these billionaires may combine forces and back the same Republican candidate, i.e., buy the same Republican candidate. The Kochs have fessed up to $900 thousand dollars for their investment in this election. Adelson put a couple of hundred thousand dollars into the previous one. Combining their money, the result will be the widest array of negative advertising the country has ever seen. And what can we do about it? Nothing, thanks to the five Supreme Court manipulators.

Is this democracy or highjacking of the country like those escapees in New York or the gun freak in Texas? Where will this end? How can this end? At some foreseeable time will one man be able to buy all the candidates in the United States? Will elections become totally predictable? Purchasable?

The Occupy Movement Through the Learning Lens

Michael Welton

History flies by our windows like the flickers who flash past my balcony overlooking a beautiful park filled with gorgeous west coast cedar and gnarly pine trees. For a moment, then, let’s remember the Occupy Movement that cracked through neo-liberalism’s carapace in the fall of 2011 before its memory recedes forever into the milky past.

Many of us in Canada and the US were taken by surprise that only three years after the credit crisis of 2008, Wall Street had consolidated its power. It made tons of money, says Doug Henwood, editor of the Left Business Observer, and it did not do this through financing any kind of economic recovery or outflow of lending and borrowing. During the crisis of 2008 (which raked our pensions of hard-earned savings) as one financial institution after another crumbled, a few diehards on the left thought that this was The Big Crisis needed to get the anti-capitalist movement rolling again.

What upset many people—and it fuelled the occupation movement in part—was the way the Obama government bailed out the very gang who brought on the crisis in the first place: unregulated investors who invented a scam system to get poor people mortgages. These people—in the millions—lost their homes. However, when you learn that Wall Street funnelled $5 billion in campaign funds to Washington, and have 3,000 paid lobbyists working the backrooms, one can see that Obama jumps as they play the tune.

Nobel prise winner (for economics) Joseph Stiglitz says that the top 1% control 40% of the wealth in America. It is the very, very rich—American oligarchs–who run the government and financial systems. They are the ones who decided on no tax increases to meet the gaping-wound needs of millions of unemployed (and underpaid employed) who have lost their houses and lack basic health care.

As several writers in the Toronto Globe and Mail (October 15, 2011) pointed out, our taxes pay for our teachers, fire fighters, our health-care workers, our roads, bridges and postal service. In his article, “We need a global army of tax collectors,” Doug Sanders reports that the Boston Consulting Group says “people and companies are stashing away $9 trillion in secret offshore banks in places such as Luxemburg, Singapore and the Virgin Islands. That’s $2 trillion more than all the banks in the US. Taxed at 11 per cent (a fraction of what’s actually owed on it), this would yield an instant trillion.”

But history is full of surprising moments when revolutionary possibilitybreaks through cement roadways and radical new directions are opened up: the Arab Spring in January 2011 and the Occupy Movement erupted into world attention months later in the fall.

The Occupy Movement through the learning lens

2011 may go down in history as the “year of occupations.” In May, Spaniards filled the square at Puerto de Sol in Madrid. Initiated by theReal Democracy Now organization, the indignados protested against their inegalitarian economic system, a democracy that no longer represented them and the evident “financial coup” that simply placed unelected men from the financial sector into important positions. The occupation of Puerto de Sol lasted a month.

Adult education in the form of general assemblies, discussions, and working groups attracted thousands of people. After the initial gatherings, the movement named itself 15-M. A nonpartisan social movement, 15-M catalyzed significant public debate through setting up assemblies in various neighbourhoods and presented a flood of proposals to engage the wider public in the Spanish election.

Influenced by the Arab Spring (if they can do it, why not us?), the 15-M movement in turn inspired the Chilean students to take to the streets to protest their government’s popular demonstrations since Chile returned to democracy. It spread to families and high schools and raised questions about inequalities and tax reform as well as representation in the political system (R. Kempf, “The year of occupation,” Le Monde Diplomatique 1205, May, 2012).

Kempf (2012) perceptive observes “that feeling of unease about a political system slipping from the control of citizens, and even more of wealth being monopolized by an oligarchy, provoked the launching of the Occupy Movement, with Occupy Wall Street (OWS) in New York on 17 September.” Several hundred people gathered in Manhattan’s financial district and found themselves near Zucotti Park, a small square surrounded by towering skyscrapers, close to Ground Zero.

Someone suggested that a general assembly be held there—as in Greece and Spain. Rare for the United States, Americans began conversations about politics on the streets and in public spaces. The OWS movement grew—with more general assemblies and working groups—these ragged kinds of collective learning processes are difficult to assess. At the base of the occupation movements—participation by storm—is the powerful idea that actually occupying public space is the fundamental way to be heard. That was enough for some; others were pressed to think of other forms of action (particularly when the police used violence to rid Zucotti Park of its residents).

Kempf (2012) acknowledges the diversity of initiatives and ideas in OWS and documents other outcomes—such as “Occupy our homes,” a “US-wide event to reclaim empty houses that had been foreclosed by the banks. But he correctly claims that “inequalities and the crisis of representation in the political system” lay beneath these protests and that the OWS was a “movement of movements,” able to draw attention to other campaigns that would not have had as much impact without OWS support.”

The occupy movement spread to many cities in Canada, the United States and Europe: Occupy London, camped around St. Paul’s Cathedral, targeted the London Stock Exchange. Now Egyptian activists could text their American, European or Canadian comrades on their streets, developing new forms of cosmopolitan solidarity. But these forms of participation by storm drew out cranky right-wing responses from the press. The reprehensible Vancouver Province called the Vancouver occupation a “whine-in.” The journalist’s advice to the occupiers was to get real and live with astronomically high housing prices and lousy jobs. Life is tough. Face reality wild-salmon lovers.

Longing for a different society

What the world-wide occupations—from Tunisia to Bahrain to Wall Street—signify is a deep and profound yearning for a different form of society and way of doing business in this damaged world. The protestors tended to zero in on the financial system. They may not know its byzantine machinations. But they know something Very Big is Wrong with the Capitalist System. The occupied spaces were cries of unfulfilled longings for something other than what is on offer. Neo-liberal capitalism is morally and ethically bankrupt—and the teeming refugee camps, bombed out cities and hunger of millions of people attest to this.

What the world-wide occupations—from Tunisia to Tahir Square to Wall Street—signify is a deep and profound yearning for a different form of society and way of doing business in this damaged world. Globalization (in its neo-liberal form) and the endless humiliations of tyrannical dictatorships intersected, unleashing powerful energy from the subterranean depths—unleashing an intense social learning process that manifested in collective action in the public squares of the world.

These public occupations precipitated complex forms of consciousness-raising. A new imaginary broke into the world—revealing that human beings do have the capacity to “do the utterly unexpected” (Arendt’s phrase).

Greek Default?

Jack Rasmus

In the past week, Greece and the coalition of the Eurozone’s Troika of Eurozone finance ministers, the IMF, and the European Central Bank (ECB) have both hardened their positions as negotiations grow increasingly acrimonious over the future of Greek debt payments.

The extension of the Greek debt negotiations, which was agreed onFebruary 28, is due to expire June 30. If no new agreement, or further extension, is agreed to by the end of June, a default by Greece on its debt is likely. Default is simply a legal term meaning failure to make timely payments on interest and principal due on a debt.

Earlier this month, Greece postponed a payment that was due to the IMF. However, according to IMF’s own rules, Greece was able to do so since Greece offered to combine the early June payment with another payment due at the end of June. Since announcing that postponement, the positions have hardened, with ultimatum-like public declarations forthcoming by both sides. Last minute arranged meetings in Brussels and elsewhere have produced little change.

On the one side, the Troika continues to demand that Greece adhere to the terms and conditions of the old agreement, signed in 2012 in its latest version, and then extended on February 28 until June 30. The Troika insists that Greece create a budget surplus of at least 3 percent, from which Greece will make debt payments to the Troika – the IMF, ECB and the bail out funds of the European Commission which together hold most of Greece’s approximately US$300 billion debt. With Greece’s economy mired in depression for more than six years, and now again weakening, generating a 3 percent surplus requires massive spending cuts and tax hikes – i.e. a continuation of ‘austerity’ that will all but ensure the Greek depression will continue for years to come.

On the other side, the Greek government, led by its majority Syriza party, has proposed an 0.8 percent annual budget surplus from which to make debt payments. It insists the 2.7 percent budget difference must be used to stimulate the economy, to boost investment, create jobs, and restore income, in order to generate taxes from which to pay down the debt. Greece proposes, in other words, a plan to grow its way out of the debt; whereas the Troika wants its money now, taken from the incomes of workers, retirees, taxpayers and local Greek businesses.

The Troika and the northern European press and media like to paint Greece as being unreasonable. But nowhere in the mainstream European media is the Troika’s ‘pound of flesh’ proposals and demands portrayed as unreasonable; nor is Greece’s ‘grow out of the debt’ solution portrayed as reasonable.

As the Troika continues to insist that Greece adhere to the old agreement terms, the Troika itself simultaneously refuses to abide by the old terms itself. Since last August 2014 it has refused to release the additional loans to Greece it was required under the same old agreement to provide, withholding more than US$8 billion. It also refuses to forward to Greece the interest earned on Greek bonds held by the ECB that was also required under the old and extended agreement. Meanwhile, the ECB continues to provide Greek banks with the bare minimum of loans under the Eurozone’s banking rules – i.e. just enough to keep Greek banks on a short leash and an economic eyelash from collapsing in the current situation. So the Troika continues to squeeze Greece and its government, to force them to agree to continue the current agreement while it, the Troika, violates that very same agreement. While negotiations continue, Greece must pay up, while the Troika does not. And nowhere in the northern European media is that described as unreasonable either.

Over the past week the Troika tightened the screws even further. Since any new agreement after June 30, whatever its content, will require a vote of the German and other Parliaments, the Troika’s representatives in negotiations want some kind of deal immediately, in order to have time to vote before June 30. Or so they say. But June 30 in reality is no real deadline, and could be easily extended by the parties if the Troika wanted. However, it appears increasingly that the Troika does not want to do so.

In an act designed to increase the pressure on Greece, the IMF representatives walked out of negotiations last June 10 and suspended negotiations, citing there were major differences and no progress was being made. Even though the IMF holds only US$23 billion of Greece’s more than US$300 billion debt, it has led the hardliners – along with Germany—in demanding a continuation of harsh austerity measures for Greece as part of Greece’s debt agreement terms. Other Troika leaders chimed in, showing a united front of opposition with the IMF to any changes in the debt payments. European Commission President, Jean-Claude Juncker, described last week’s negotiations prior to the IMF walkout as “a last attempt to make a deal possible.” Donald Tusk, the European Council president added his hardline take, saying “the day is coming, I’m afraid, where someone says the game is over. There’s no more time for gambling.”

The Troika’s recent abrupt shift to a much harder line seems to have emerged from the G7 meeting in Bavaria over the weekend of June 6-7. At that meeting, US president Barack Obama reportedly agreed with the hardliners, giving them a green light. The Troika’s stiff response and proposals that immediately followed the G7 meeting were met by a Greek equally adamant response on June 8. The Troika proposed that Greece retract pensions that were restored after February 28 and impose even more stringent labor market reforms in Greece. That reportedly incensed both the Syriza left wing as well as moderate members of the Greek parliament. With rising opposition to the Troika’s latest proposals within both his party and government by mid-week, Greek president, Tsipras, then met with European Commission president, Juncker, on June 10. But with positions of both sides hardening, the most recent face to face discussions between Tsipras and Juncker went nowhere. The IMF thereafter walked out on June 11, and the flood of Troika accusations and the media attack on Greece quickly followed.

The key strategic question at the moment is why is the Troika hardening its line and position, with a deadline for the extension expiring in less than two weeks? Why did it propose an apparently ‘no changes, take it or leave it’ to Greece on June 7 following the G7 meeting. It surely must have known that response would incite anger and more opposition within Greece’s parliament? So why the abrupt harder line and ‘take it or leave it’ proposals?

First, it is obvious that Greece cannot repay the more than US$300 billion in debt it owes the Troika, either by means of agreeing to more austerity or even by ‘growing’ out of the debt – neither of which is going to happen soon. Greece’s debt is reportedly about 180 percent of its annual GDP. That amount of debt can only be restructured, i.e. reduced and expunged at least in part. It is too large to pay down by diverting spending – i.e. austerity. And too large as well to grow out of it. But northern European politics stand in the way of any form of debt restructuring at the moment, especially in Germany. So some kind of crisis must be allowed to happen first, in order to put pressure on both German and Greek public opinion and parliamentarians to seriously consider debt restructuring.

Up until the G7 meeting, the Troika wanted a ‘Plan A’. That plan was to get Greece to agree to simply extending the old terms of agreement for some unspecified further period. The Troika would then release the US$8 billion it held in arrears, from which it would in effect pay itself the US$8 billion in Greek payments due between June 30 and August. Clearly the Troika has been holding those loans back, in order to eventually pay itself with them. But what the Troika really wants in Plan A are its proposed, even more stringent ‘labor market reforms’ implemented in Greece. Those labor market reforms include laying off the government workers the Syriza government rehired after it was elected, reversing the moderate pension restoration Syriza introduced, suspend raising the minimum wage in Greece, implement all previously planned privatizations, and introduce changes to union collective bargaining agreements and right to strike.

These labor market reforms are just as much at the heart of the differences between the Troika and the Syriza government as is how much surplus should be created (0.8 percent vs. 3 percent) going forward. The reason why the Troika wants labor market reforms is that, should the Troika let Greece off the hook on the reforms, then the precedent will be set for weakening similar reforms Eurozone bankers and politicians are desperately trying to get passed in France and Italy.

The Eurozone economic recovery strategy is based on boosting exports. To boost exports, costs of production must be reduced. The ECB’s recent QE monetary policy is designed to drive down the value of the Euro currency. That reduces costs from currency devaluation and makes Eurozone exports more competitive. But ‘internal devaluation’ does the same. Internal devaluation is about holding down or reducing prices of goods for export by lowering production costs, especially wage costs. That has been done already in Spain, which appears to be the new model for Euro exports and recovery. Spain introduced stringent labor market reforms several years ago, made its goods more competitive, and boosted exports. That did little for Spanish workers’ wages, or for job creation in Spain which is still at depression levels. But Spanish GDP has risen modestly. The Troika and the Eurozone economic elite want to extend labor market reforms elsewhere. To let Greece ‘off the hook’ jeopardizes that Eurozone-wide strategy, and puts all the pressure on boosting exports on the ability of the ECB, the central bank, to engineer exports growth by means of QE-driven currency devaluation. Internal devaluation and QE-currency devaluation thus go hand in hand.

It is important to note that Syriza and the Greek government have made concessions already in the direction of agreeing to some labor market reforms since February 28. But those concessions have been met by Troika demands for more of the same, without any counter-concessions by the Troika in return. In an article that appeared in the French newspaper, Le Monde, in early June, Greek president, Tsipras, publicly indicated that his government had already accepted a number of privatizations, and had repealed some early pension retirement benefits and raised the pension retirement age. Tsipras also indicated Greece was committed to introduce labor market reforms that were outlined by the International Labor Office in Geneva. The Troika accepted that, and then continued to demand even more, while making no concessions in response that would have kept the negotiations on a productive track. Instead, once Tsipras’ Le Monde article appeared publicly, the Troika’s door slammed shut just after the G7 meeting a few days later.

All of which leads one to suspect the Troika has shifted to a Plan B. That Plan B is most likely to force a default crisis, to push Greece to the edge of default, or perhaps into default itself. So why might the Troika prefer Plan B is the key question?

First, Plan A does not appear politically possible at this point, either in Greece or Germany. Second, default may in fact represent what the Germans want. Greece’s debt is unsustainable. Greece cannot repay it with more austerity. Seven years of depression is the limit and the Greek people are in rebellion against the Troika program. It is equally apparent that Greece can not ‘grow out of’ the debt, notwithstanding Syriza’s proposals to do so. Just do the numbers, as they say. With debt nearly twice the size of Greece’s annual GDP, it would take decades of continuous 3% GDP growth to pay off the debt. And given the state of the global economy, and Europe’s even worse economy, there’s no way 3% growth will continue for decades, or even for the next several years for that matter. It just won’t happen. So, if Greece can’t repay and if it can’t grow out of it, and if German politics won’t provide any more debt or allow a restructuring of the current debt that includes forgiving part of that debt—then the only option that remains is to let a crisis happen. In other words, let it go to default.

A default for the Troika is actually attractive in some ways. First, with its recent authority to inject US$1.2 trillion in QE, the ECB has sufficient funds to bail out northern Europe banks and bondholders who may be negatively impacted by a default. In the meantime, the Troika has the US$8 billion to make payments to itself for another 60-90 days, so no default impact on government bonds. In the interim period, default might allow the debt restructuring that political forces in Greece and Germany today now oppose.

From the Troika’s perspective, a default would also reduce the value of the Euro. And that’s not all bad in the view of European export-oriented corporations. The ECB’s QE policy has lowered the Euro currency’s value some, with some modest boost to exports. But not enough. A default would reduce the value of the Euro further and theoretically provide another boost to exports and the sagging Eurozone economy.

A default would have serious short term economic effects within Greece. Capital flight from Greece would intensify in the event of a default. Capital controls would have to be imposed. The Syriza government would most likely have to call an election, and that may be precisely what the Troika wants as well. With only a majority of 12 in the Greek Parliament, the Syriza government might just lose political control in the Parliament. A new government might prove more amenable to Troika demands, especially if a Troika engineered even deeper economic crisis in Greece is successfully blamed on Syriza and Tsipras by a Euro-wide public media barrage aimed at Syriza. No doubt the Troika’s big business supporters still within Greece would assist.

So the Troika’s Plan B now unfolding may just be to precipitate a default. To shake up the economic and the political landscape in Greece and elsewhere. To shift perceptions and positions, and perhaps even the players themselves.

What we have seen in recent months and weeks is a classic capitalist bargaining strategy. If capitalists or their managers don’t like the other party’s negotiators, they undermine their reputation within their own team. The tactic is to make them appear incompetent and then go around them and have them replaced. That was done several weeks ago by the Troika with regard to Greece’s finance minister, Varoufakis, who was then partially sidelined. The Troika hoped Tsipras would prove more pliable and amenable. But the Syriza party rank and file rose up lasts week and injected itself into the negotiations. Tsipras then resisted making more concessions when the Troika made none in return. How could he, without signaling willingness to completely collapse his demands?

Having succeeded once in sidelining Varoufakis, the Troika strategy now is apparently to create a further crisis in order to replace Tsipras himself and dislodge Syriza from a majority position in the Greek parliament by forcing Greece to call new elections. If that succeeds, it just may get the Troika a more pliable negotiating partner later this summer. In the meantime, a default crisis lowers expectations on both sides and makes compromise later this summer more possible than at present. In the meantime, the US$8 billion funds are used to pay bonds due and the ECB stands by with its US$1.2 trillion QE fund to calm the markets. In short, Plan B looks more attractive than Plan A which has reached a dead end.

To summarize, the Greek debt crisis cannot be resolved by either more austerity or by growing out of it. The Troika is perhaps realizing this. The debt must be restructured, but that is impossible politically without a deeper crisis. So the Troika may have decided to provoke one. In the process it may shake up the chessboard, as they say, and result in an easier bargaining opponent and a more ‘reasonable’ public – both in Germany and in Greece – that agrees to some kind of debt restructuring. That may be Plan B about to unfold in the next two weeks. If so, it will become more apparent when the Eurozone ministers meet again onThursday, June 18. Watch closely.