Australia: Toys ‘R’ Us closure to destroy 700 jobs

Terry Cook

Toys ‘R’ Us, the largest toy chain in Australia, confirmed last Wednesday it will close its 44 stores, along with its head office and distribution centre in Sydney, putting more than 700 people out of work. The company’s online ordering system was wound up on June 22.

The shutdown is being enforced by the trade unions. The Shop, Distributive and Allied Employees’ Association, which claims to represent retail workers, has issued no statement on the job cuts, signalling its support for the closure, and its contempt for the company’s employees.

Toys ‘R’ Us, which began Australian operations in 1993, was placed in voluntary administration last May amid a deepening financial crisis. The company continued to trade while attempts were made to find a buyer. All expressions of interest, including from private equity firms Allegro and Anchorage, were withdrawn and no new ones emerged.

The closure could also see hundreds of customers left out of pocket. Administrators McGrathNicol told prepaid gift cardholders to use the vouchers by July 5, specifying that shoppers must also spend a cash equivalent. Lay-bys will be met until July 5, but only if stock is available.

Many of the Toys ‘R’ Us workers are young people employed as low-paid casuals to maximise workplace flexibility and boost company profits. They now face a precarious future, having been flung out of work in an ever-tightening job market.

A recent survey by research company Roy Morgan refuted the claims of the federal Liberal-National government that it is creating thousands of jobs every month. The survey showed unemployment at 9.8 percent, meaning that over 1.3 million workers are without a job. A further 1.25 million, or 9.3 percent of the workforce, are under-employed, working part-time and seeking more hours.

The retail sector continues to struggle, amid falling consumer confidence caused by stagnant or declining wages and a soaring cost of living.

According to the Australian Bureau of Statistics (ABS), national retail sales were flat in March and April. The National Australia Bank’s cashless retail sales index, measuring the value of electronic transactions processed through the bank, fell by 0.6 percent in April. This month, clothing, footwear and personal accessory sales growth dropped to 1.71 percent on a year-on-year basis, down from 3.76 percent growth in May, which was primarily driven by substantial discounting.

This year alone, fashion retailer Gap closed its Australian outlets, destroying around 50 full-time and 150 casual positions. Global fashion retailer Esprit also ended its Australian and New Zealand operations, closing 60 outlets at the cost of 350 jobs.

Other closures over the past two years, which have resulted in thousands of job losses, have included retailers Marcs, David Lawrence, Herringbone, Rhodes & Beckett and children’s clothing chain Pumpkin Patch.

Toys ‘R’ Us accounted for 10 percent of the $2 billion annual Australian toy market. The company, however, was operating at a loss. In the 12 months to January 28, 2017, it posted a $7.6 million operating loss and a $9 million loss the previous year.

Financial reports filed in June 2016 by Toys ‘R’ Us Australia said its future depended on financial support from its American parent company, warning that if support was “withdrawn or not continued there is significant uncertainty whether the company and the consolidated entity will be able to continue as going concerns.”

In early March, the US parent company announced it would liquidate its 1,700 stores worldwide, including its 735 American stores, destroying 33,000 jobs. The company was previously the world’s largest retailer of toys and games, accounting for around 15 percent of the market. Its collapse was the third-largest retail bankruptcy in history.

While the growth of online sales and increased competition contributed to the demise of Toys ‘R’ Us, its fate sheds light on the parasitic role played by private equity firms in liquidations across retail and other major sectors.

Founded in 1948, the American-based Toys ‘R’ Us was acquired in 2005 by Bain Capital Partners LLC, Kohlberg Kravis Roberts (KKR) and property company Vornado Realty Trust in a $6.6 billion leveraged buyout. The three firms only contributed $1.7 billion of their own funds. They borrowed the remainder and saddled the company with a mountain of debt. Toys ‘R’ Us also had to pay around $600 million in fees to the consortium that purchased it.

John Vaz, a corporate finance academic at Australia’s Monash University, commented: “You may have $1 million, you borrow another $3 million and you control a company worth $4 million. The company that has been bought has to pay off the debt used to buy it.” He added: “Private equity are not there for the long term, so they want an exit strategy to pay off the debt and collect the gain.”

The same destructive process has produced closures and downsizings across Australia’s retail sector. In 2016, electronics retailer Dick Smith, which had been bought by Anchorage Capital Partners, a private equity firm, closed hundreds of outlets at the cost of 3,300 jobs. While the workers were thrown on the scrapheap, Anchorage walked away with hundreds of millions of dollars.

Payless Shoes likewise closed 132 stores across the country in 2016, axing 730 jobs. Its US parent company filed for bankruptcy this year, along with another 50 US retailing companies, many of which are private equity-owned enterprises and have global reach, including in Australia.

In every instance, the trade unions, working with big business and the Labor Party, have enforced the closures and cutbacks demanded by finance capital, suppressing opposition from workers to the destruction of their jobs, wages and conditions.

Argentine workers stage massive general strike against Macri’s austerity policies

Rafael Azul

Following months of inaction against the sackings as well as attacks on wages and living conditions, the General Confederation of Labor (CGT), allied with the three wings of the Peronist Party, organized a 24-hour work stoppage. By all accounts, there was a broad level of participation in this one-day protest, virtually paralyzing the country.

At issue are the economic policies of the right-wing government of President Mauricio Macri. This is the third CGT-organized protest strike since April 2017 and by far the one with the most popular support. Monday’s strike paralyzed schools, transportation, banking and other services.

The strike, called two weeks ago by the CGT bureaucracy, was supposedly meant to “send a message” of working class opposition to austerity policies by the Macri administration, in the context of accelerating consumer price inflation that is driving many Argentine workers into poverty. Instead, it revealed workers’ underlying anger, resistance and willingness to fight.

The “message” for the Argentine unions is that the working class is getting out of control. The unions are offering a new round of negotiations with Macri over wages and labor reforms. Denying the government accusation that their demands are “politically motivated” by the Peronist parties, union leaders declared themselves non-political and warned of an impending social catastrophe.

Joining the CGT were smaller union federations: the CTA (Argentine Workers Central) and the Autonomous CTA, bank workers, health workers, education workers and court employees. With more than 3,000 unions, and 3.1 million members (40 percent of the labor force), Argentina is the most highly unionized country in the Americas. Its unions, split into competing federations, are also very likely among the most conservative. During more than a year, between December 2015 and April 2017, the CGT and other unions observed a truce with the Macri government. Having ended the truce with the first protest general strike, they limited and isolated workers’ struggles as much as they could. None of the CGT’s conciliatory tactics appear to have changed.

The role of its aging bureaucracy—most of the CGT and CTA leaders have been in power for more than 25 years—notorious for its corruption and horse-trading strategy, is to dissipate working class opposition to the policies of the ruling oligarchy.

In line with the class-collaborationist policies of the union bureaucracies, no mobilizations, marches or rallies were scheduled on Monday.

Workers were asked to stay home. Those marches, rallies and mass pickets that did take place in Buenos Aires and several other cities were called by left groups and dissident factions within the unions.

Prominent among the organizers were pseudo-socialist groups, such as the Morenist Socialist Workers Party (PTS) and Izquierda Socialista (IS), and the Partido Obrero (PO). Their demand was a 12-hour extension of the one-day strike in order to organize a mass rally at Buenos Aires’ government house in Plaza de Mayo. They were joined by thousands of workers who were already on strike. Among the most numerous participants were teachers and public-sector workers.

Protests took place in every major city in Argentina.

At these demonstrations, there was a heavy and intimidating police presence, with dogs and water cannon at the ready to repress the protesters.

On June 8, President Macri reached an agreement the International Monetary Fund’s (IMF’s) Christine Lagarde granting Argentina a $15 billion installment on a $50 billion rescue package. Lagarde praised Macri for moving swiftly, in the context of international financial volatility, to counter the capital flight that had weakened the Argentine peso and exacerbated the nation’s ongoing debt crisis. The agreement with the IMF received a strong endorsement from US Treasury Secretary Steven Mnuchin.

As part of the IMF agreement, Macri pledged to abandon his go-slow austerity measures, including budget cuts, attacks on pensions and wages, and large increases in public utility charges to consumers, in favor of a more aggressive assault on wages and living standards. The big fear of the Argentine establishment is a repeat of the revolutionary upsurge that brought down the government in 2001 and 2002, in the midst of financial collapse and economic depression.

For this, Macri and the Argentine bourgeoisie are counting on the CGT and the other unions. Last week, in negotiations with the union bureaucracies, Macri agreed to a 5 percent wage supplement over the 15 percent agreed to by many of the unions. These increases are insufficient when the most optimistic observers expect inflation rates of 25 percent or more.

The financial collapse now threatens the bureaucracy. The very high level of participation in this strike, compared to previous ones, is itself a sign of the increasing resistance of the Argentine working class.

At noon on the day of the strike, the CGT leadership gave a press conference in Buenos Aires. CGT leader Juan Carlos Schmid called on the government to engage in a round of discussions with the unions, including union participation in new labor reform legislation. The government has “another opportunity” to sit at the table, declared Schmid.

Sergio Palazzo, leader of the bank workers’ union ( Asociación Bancaria ), after declaring his astonishment at the scope of the strike, voiced his hope that the government would respond and meet with the bureaucracy: “ Ojalá (God willing) the government will understand the anger that its policies generate,” declared Palazzo. “If it does not take note of this strike, social conflict will increase,” he warned.

Pretending to be blind to the scale of the strike, Economics Minister Rogelio Frigerio blamed the broad participation on a “lack of public transit.”

Government officials denounced the strike; Macri declared that it “did not help at all.” Elisa Carrío, a leader of Macri’s Cambiemos bloc, denounced Argentine workers for not being ambitious and productive enough, likening them to “corrupt chickens content with eating worms on the ground.”

Erdogan wins Turkish elections with reduced majority

Halil Celik 

Turkish President Recep Tayyip Erdogan won the presidential election on Sunday with 52.3 percent of the vote. Earlier predictions that he might fall short of an absolute majority and face a second-round runoff against the leading opposition candidate did not materialise.

His main rival, Muharrem Ince, from the Republican People’s Party (CHP), received 30.7 percent of the vote. Selahattin Demirtas, the imprisoned leader of the pro-Kurdish People’s Democratic Party (HDP), obtained 8.3 percent. Meral Aksener of the far-right Good Party garnered 7.4 percent of the vote.

In the parliamentary election, Erdogan’s ruling Justice and Development Party (AKP) registered considerable losses. Compared to the last election in November 2015, its support fell from 49.5 percent to 42.4 percent. It secured 293 out of 600 seats in the Turkish parliament. However, it maintains control due to its coalition with the fascistic Nationalist Movement Party (MHP), which won 50 seats. The People’s Alliance of the AKP and the MHP gained a total of 53.7 percent of the vote.

The main opposition party, the CHP, has won 146 seats. With 22.7 percent of the vote, it received 2.6 percent less than in 2015. The far-right Good Party, the CHP’s main ally in the Nation Alliance, gained 44 seats and 10 percent of the vote. The CHP-led Nation Alliance as a whole received roughly a third of the vote.

The HDP clearly surpassed the 10 percent threshold for parliamentary representation. With 67 seats and 11.6 percent of the vote, it is the third largest party in the Turkish parliament, with more delegates than the two far-right nationalist parties, the MHP and the Good Party.

The HDP’s improved result is mainly due to its success in Kurdish areas, where it is the strongest party and where Demirtas received the most presidential votes, along with its support from pseudo-left, liberal and social democratic non-HDP voters who backed it in an effort to block an AKP majority in parliament. Had the HDP fallen short of the 10 percent electoral threshold, the AKP would have received an extra 50-60 seats because it is the only other party with strong support in the Kurdish-populated south-eastern areas of the country.

The election reflects a growing polarisation of the country. The urban areas bordering the Aegean Sea, including the metropolises of Istanbul and Izmir, as well as a section of Ankara, the capital, voted for the CHP, the south-eastern areas voted for the HDP, and the entire rest of the country showed a clear majority for the AKP.

The elections were originally scheduled for November 2019. However, amid an escalating war drive in the Middle East and an economic collapse that has seen a sharp fall of the Turkish lira against the US dollar and the euro, Erdogan decided to call a snap election in anticipation of growing opposition against his government. He also calculated that he could capitalise on nationalist sentiment amid ongoing military operations against Kurdish militias in Syria and Iraq.

With the June 24 election, the new constitution approved in an April 2017 referendum will come into force. It establishes a presidential regime giving Erdogan more powers than are granted to the US and French presidents, effectively entrenching one-man rule with no serious checks and balances. Erdogan will simultaneously be head of state and official leader of the AKP. He will nominate cabinet ministers, the chief of staff, the principals of the universities and some of the highest judges.

There was no shortage of voting irregularities. These, however, were not on a scale to alter the result. Following initial warnings of possible electoral fraud, largely provoked by the huge discrepancy between reports on the results by the Anadolu news agency and figures obtained by the opposition parties, the latter accepted the results as fair. Prior to the elections, the Nation Alliance had formed the “Fair Election Platform,” which included the HDP and some trade unions, to “prevent possible electoral corruption.”

The electoral success of Erdogan and his AKP is mainly due to the bankruptcy and anti-working-class character of the opposition. Despite Erdogan’s alliance with the fascistic MHP, an escalating crackdown on the opposition and a compliant media, the AKP suffered a substantial decline in its vote.

Since a failed coup on July 15, 2016, Turkey has been under a state of emergency. Some 150,000 public servants and soldiers have been dismissed from their jobs and more than 50,000 people have been imprisoned. Hundreds of critical journalists and academics have been jailed or forced into exile.

The June 24 elections have revealed the growing distrust and anger of workers against the establishment parties. While the AKP lost votes, its pro-NATO, pro-European-Union opponents could not offer any solution to the deepening economic and political crisis of Turkish capitalism other than to escalate Erdogan’s militarist and anti-working-class agenda, peddled by Ince with pseudo-democratic populist appeals.

The June 24 election has also exposed the pro-imperialist and anti-working-class character of the pseudo-left groups, which worked to channel growing opposition behind the CHP and HDP. They did their utmost to line up working-class opposition behind the CHP-led Nation Alliance and the HDP. There is no doubt that the same pseudo-left groups that have tried to divert the working class and the youth behind the bourgeois opposition will respond with extreme hostility to workers who challenge capitalist rule.

The June 24 elections have major implications for the working class not only in Turkey, but in the Middle East as a whole.

In its statement published in advance of the elections, the Socialist Equality Group of Turkey wrote:

“As Turkey is engulfed in the imperialist-led war drive and the economic crisis in the Middle East, the decisive question is the political perspective for the working class. The bloodshed in Iraq and Syria and war threats to Iran, the AKP’s threats to ‘eradicate’ the PKK leadership that fuel the civil war in Kurdish areas of Turkey, and the capital outflow driving the collapse of the lira rule out a stable and peaceful development. Enormous shocks and crises lie ahead, in which the working class will intervene.”

It is not the factions of the ruling class, supported by the petty-bourgeois opponents of Erdogan, but the Turkish working class, in close cooperation with Middle Eastern, American and European workers, that will fight against the drive toward imperialist war and its devastating economic and social consequences, including the authoritarian forms of rule prevailing in Turkey.

While the European and other imperialist powers would clearly have favoured a victory by the bourgeois opposition, they immediately began to seek a new arrangement with Erdogan.

In a speech to his followers late Sunday, Erdogan insured them that there would be no retreat from his drive to transform Turkey into a “reputable, honourable and influential country in all areas in the world.” His main rival, the CHP’s Ince, conceded defeat only on Monday, warning that the Turkish presidential system under Erdogan was “very dangerous.”

Also on Monday, the Turkish Industry & Business Association (TUSIAD), representing the country’s main conglomerates, released a statement calling for reconciliation and reform, including “a rational economic program and financial discipline,” i.e., further austerity measures and intensified exploitation of the working class. The TUSIAD also stressed the necessity for an “acceleration of the process of adaptation to the European Union.”

At his daily press briefing in Brussels, European Commission spokesman Margaritis Schinas expressed the hope that “Turkey will remain a committed partner for the European Union on major issues of common interest such as migration, security, regional stability and the fight against terrorism.”

Speaking at a news conference in Berlin, German Chancellor Angela Merkel’s spokesman Steffen Seibert said the chancellor was “looking forward to continuing a constructive, beneficial working relationship between the German and Turkish governments.”

Russian President Vladimir Putin, Indonesian President Joko Widodo and Ilham Aliyev of Azerbaijan congratulated Erdogan for his electoral success.

Thousands of refugees forced onto death march into Sahara desert

Bill Van Auken

More than 13,000 refugees and migrants, including pregnant women and children, have been force-marched into the Sahara desert by Algerian security forces over the past 14 months, where many of them have died from hunger and exposure.

The shocking revelation by the Associated Press was substantiated by videos showing hundreds of migrants stumbling through a sand storm and others being driven in massive convoys of overcrowded trucks to be dumped at Algeria’s southern border with Niger and forced into the desert at gunpoint.

As the AP itself makes clear, the murderous policy of the Algerian government is being carried out at the behest of the countries of the European Union, which have increasingly sought to induce North African regimes to act as their border guards, impeding the flow of migrants by means of intimidation, violence and death.

The refugees are being forced by Algerian security forces into the Sahara without food or water and, in many cases, after being robbed of their money and cellphones. They are pointed in the direction of the nearest settlement in Niger, over nine miles away, across empty sands where the temperature rises as high as 120 degrees Fahrenheit.

The migrants told AP of “being rounded up hundreds at a time, crammed into open trucks headed southward for six to eight hours to what is known as Point Zero, then dropped in the desert and pointed in the direction of Niger. They are told to walk, sometimes at gunpoint.”

Two dozen different migrants who survived the crossing told the news agency that in their groups a number were unable to go on and died in the desert. “Women were lying dead, men ... Other people got missing in the desert because they didn’t know the way,” said Janet Kamara of Liberia, who was pregnant when she was forced across the border. “Everybody was just on their own.”

Kamara’s baby died at birth and she was forced to bury him in a shallow grave in the desert. “I lost my son, my child,” she said.

While the world’s media has focused on the dangerous crossing from northern Africa to southern Europe having turned the Mediterranean into a watery graveyard for countless thousands, according to the International Organization for Migration (IOM), for every refugee who drowns in the sea, two more succumb to the relentless heat and harsh conditions of the Sahara. It estimates that the death toll in the desert exceeds 30,000 just since 2014.

The migrants expelled by Algeria come from countries throughout sub-Saharan Africa, including Niger, Mali, Gambia, Guinea, Ivory Coast, Senegal, Liberia and others.

“They come by the thousands ... I’ve never seen anything like it,” Alhoussan Adouwal, an IOM official in Assamaka, Niger told AP. “It’s a catastrophe.”

A spokesperson for the European Union told AP that the EU is aware of what Algeria is doing with refugees and migrants, but that its view is that “sovereign countries” can carry out such expulsions so long as they comply with international law.

The revelations about the horrors inflicted upon refugees in the Sahara desert come on the eve of a summit meeting of EU member states on Thursday to discuss the issue of immigration.

On the eve of the summit, EU foreign policy chief Federica Mogherini has been urging EU member states to put more money into an Africa trust fund with an eye toward financing the construction of “migrant screening” camps in North Africa. At the top of the EU summit agenda is expected to be a proposal for holding asylum seekers at such camps in countries that include Algeria, Egypt, Libya, Morocco, Niger and Tunisia.

In the run-up to the summit, Matteo Salvini, the leader of the right-wing, anti-immigrant Lega party and Italy’s new interior minister, flew to Tripoli on Monday to praise the regime for its “excellent work” in “rescuing” nearly 1,000 people on Sunday after the Libyan Coast Guard intercepted them. The purpose of the coast guard, which is financed, trained and to some degree directed by Italy and other European powers, is not to rescue refugees trying to reach Europe, but rather to drag them back to Libya. There they face imprisonment in camps where torture and executions are commonplace and even being sold into slavery.

Salvini said that Italy would work with the UN-recognized regime, which controls little outside of Tripoli, to stop a “full-on invasion” of Libyan waters by aid groups seeking to rescue refugees at sea. He also called for migrant detention centers to be placed at Libya’s southern border in the Sahara desert.

Salvini has become infamous for refusing to allow rescue ships carrying refugees to dock at Italian ports. He ordered the Aquarius carrying over 600 refugees, including pregnant women and children, turned back earlier this month, forcing it to make a dangerous voyage to Spain. Presently, there are two ships in limbo in the Mediterranean carrying hundreds of refugees, a boat operated by German aid group Mission Lifeline with 234 aboard, and the Danish-flagged Alexander Maersk cargo ship with 100. In a statement laying bare the depth of the racism and reaction of the new Italian government, Salvini referred to the refugees as “human meat.”

Meanwhile the new PSOE government in Spain, which allowed the Aquarius to dock and condemned the Italian response, dispatched its own interior minister, Fernando Grande-Marlaska, to Morocco with much the same mission as Salvini’s in Libya, securing cooperation for immigrant detention camps.

Spain’s new development minister, Jose Luis Abalos, told Cadena Ser radio that, while Spain is taking “a respectful humanitarian approach” toward the refugees’ plight, it had no intention of becoming “Europe’s maritime rescue organization.”

Human rights groups have warned that refugees will be subject to abuse and denied asylum rights if kept in camps in Libya, Egypt and other North African countries with records of massive human rights abuses. EU Migration Commissioner Dimitris Avramopoulos, who is playing a central role in plans for setting up these centers, responded to these concerns last week, declaring, “I want to be very clear on that. I’m against a Guantanamo Bay for migrants.” He was referring to the Guantanamo Bay Naval base prison camp where those rounded up in the US “war on terror” were subjected to systematic torture.

In Europe, as in the US—where President Donald Trump has expressed his own desire to throw Central American refugees back into the desert without any asylum proceedings—the number of refugees and migrants has actually fallen steadily, even as the political hysteria whipped up by right-wing governments and politicians has sharply escalated.

According to the UN refugee agency, the number of migrants arriving in Europe is on track to reach just half the number for last year, and less than a quarter the number in 2016.

The “immigration crisis,” both in Europe and America, is a noxious political invention, aimed at dividing the working class and scapegoating the most oppressed layers of the population and the victims of imperialist war and oppression for the continuously worsening conditions created by capitalism.

Iran's Economic Losses and the Nuclear Deal

Shivani Singh


On 8 May 2018, lingering tension regarding the future of the Joint Comprehensive Plan of Action (JCPOA) culminated in US President Donald Trump officially withdrawing from the deal. This exposes Iran to heavy US primary and secondary sanctions that can have a debilitating affect on its economy.

To prevent the deal from falling apart, the remaining signatories of the JCPOA - China, Russia, France, UK and Germany – have signalled their commitment to the provisions of the deal despite US’ withdrawal. However, continuing the trade flow between them and Iran will be tough given the extended reach of US sanctions, most of which are extra-territorial in nature. This article analyses the feasibility of the commitment, and whether it is really possible to compensate Iran for economic losses in the absence of US sanctions relief. 

US Secondary Sanctions: Consequences for European Partners
The re-imposition of US sanctions will bring back into place restrictions on commercial activities and associated services related to“shipping, shipbuilding, port transactions andsale, supply or transfer of goods and services in Iran’s automotive sector” along with a myriad of other constraints on Iran’s financial and energy sector. Since US trade with Iran itself is nominal, it is mainly the secondary sanctions (targeting foreign entities that are owned or controlled by the US or freezing the assets of those non-US persons who have business dealings with both Iran and the US) rather than primary sanctions that will have a severe affect on Iran’s economy. 

As the EU is Iran’s fifth largest trade partner accounting for 16.1 per cent of its trade and fulfilling most of Iran’s civil aviation needs, European companies are likely to bear the brunt of these secondary sanctions. The problem lies in the fact that majority of European companies with businesses in Iran also happen to be companies in which the US has a hefty stake, thus automatically exposing them directly to secondary sanctions. 

For example, the French multinational corporation, Airbus, which designs civil and military aeronautical products, has one of its main manufacturing and production facilities in the US. North America alone generates US$ 14.6 billion in revenue, accounting for almost 20 per cent of the company’s total revenues. Additionally, Airbus recently confirmed a US$ 50 billion order of supplying 430 aircraft to the US Pvt. Equity fund, Indigo Partners, in 2017. In light of the US$ 20 billion it might lose in its pending deals with Iran as a result of sanctions, in addition to preserving its long-standing relationship with the US, a valued industrial partner, Airbus’ decision seems preordained. 

Additionally, many European companies with businesses in Iran transact in US dollars. For instance, the French oil and gas company, Total, which has binding agreements to develop oil and gas fields in Iran, has 90 per cent of its financing operations managed by US banks. 30 per cent of its investors are US shareholders. Total has already announced its plans of terminating all business in Iran in order to avoid US secondary sanctions. 

Blocking Statue: A Way Out?
There are talks of invoking the ‘Blocking Statute’ to preserve the interests of European companies in Iran by banning them from complying with US sanctions. This will be supplemented with other EU measures like “promotion of government-financed trade with Iran, direct investment through the European Investment Bank (EIB), and bypassing US dollar by making special Euro-denominated oil and gas transactions with Iran’s Central Bank.”

Although it seems like a good solution on paper, its viability is debatable. European oil and gas giants like Total and British-Dutch Shell, French carmakers like Peugeot and Renault, and the German manufacturer, Siemens, will have to take a call between saving their business with a US$ 1.6 trillion economy like Iran with a GDP per capita income of not more than US $ 19,000, or tapping into and preserving its space in a US $20 trillion economy like the US. Moreover, the blocking statue in article 5(2) provides a special exemption to European companies to enable them to comply with the sanctions in order to preserve their interests. The statute does not really shield European companies from the losses they will incur as a result of severing ties with the US, hence putting the firms in a tough position. There are many other technicalities that can be problematic while assessing the impact of this statue. 

US sanctions provide businesses operating in Iran with a 60-120 day wind-up period and the strain on the European business sentiment is already starting to show with reports of the Danish shipping company Maersk and Peugeot owner PSA backing out of their joint ventures in Iran.

Chinese and Russian Support to Preserve the Deal
At this point, it seems highly unlikely that China or Russia will be able to cushion Iran’s economic losses. Even though China is Iran’s biggest trade partner and bilateral trade saw an increase of almost 24 per cent in 2017, trade with Iran accounted for only 1 per cent of China’s total foreign trade with other countries in 2017. Moreover, China’s trade with Iran is heavily oil-dominated, with China’s main item of import from Iran being only oil. 

Russia-Iran trade is mainly restricted to the energy sector. There are talks of Russia exploiting the civil aviation space by selling the Russian Sukhoi SuperJet-100 and Irkut MC-21 models as a substitute for Airbus and Boeing aircraft. However, many parts of these Russian models are US manufactured which can put such exports under the purview of US sanctions. These are also essentially short-range jets and there is no real substitute at the moment for Western long-range jets. Therefore, as of now, it seems highly unlikely that China and Russia will be able to meet the sector-specific losses to Iran.

If European companies with big businesses in Iran do in fact chose to opt out, Iran is likely to suffer trade losses to the tune of US$ 10.8 billion - the amount it gained from imports from the EU after lifting of sanctions in 2016. Given that Iran has made its intention of enriching Uranium public accompanied by a threat of pulling out of the NPT, the remaining signatories of the JCPOA will have to come up with a viable solution to compensate for Iranian losses, and fast. 

Egyptian Dictator el-Sisi intensifies state repression

Jean Shaoul 

Egypt’s military dictator President Abdul Fattah el-Sisi has tightened his grip on power, removing potential rivals from his inner circle, as his tyrannical regime intensifies the crackdown on dissent.

It follows el-Sisi’s second-term inauguration last month after March’s sham election banned candidates critical of the regime.

The moves are in preparation for further International Monetary Fund (IMF)-backed austerity measures aimed at enriching the military elite around him at the expense of Egypt’s impoverished working class and peasants who are seething with discontent.

Adding to the explosive situation is the internecine in-fighting between rival factions of the military and intelligence circles, which have increased their already dominant position in the economy and political apparatus.

El-Sisi appointed Mustafa Madbouly as prime minister and 12 other cronies to head government departments, including defence, interior, trade, finance and agriculture. He selected his close friend, Lieutenant General Mohamed Ahmed Zaki, the head of the elite Republic Guard, as defence minister. He replaces Sedki Sobhi, a former head of the Egyptian armed forces, who was perceived as a potential rival. This brings to 33 the number of top military official sacked by el-Sisi since July 2013.

It was Zaki who personally arrested Egypt’s elected Muslim Brotherhood president Mohamed Morsi and his government during the 2013 coup that put el-Sisi in power.

The interior ministry has been given to Mahmoud Tawfik, former head of the domestic National Security Service. Mohamed Maait, the deputy finance minister, has been promoted to head the finance ministry, replacing Amr El Garhy, who was instrumental in initiating IMF-dictated austerity in 2016 in return for a $12 billion bailout, when the country was all but bankrupt.

As part of that IMF deal, Egypt floated its currency, which soon lost half its value against the dollar, causing inflation to reach 33 percent in July 2017. In a country that imports much of its food, fuel and manufactured goods, prices are still rising—by 13.3 percent in March. As inflation has soared, the central bank raised interest rates to about 20 percent, making credit prohibitive under conditions where factories were working at 50 percent of their capacity.

With a budget deficit for 2017-18 of almost 10 percent of GDP, the government has introduced a value-added tax and multiple cuts to energy, petrol and basic food subsidies upon which 70 million people depend. In March, angry workers took to the streets of Minya, Desouk, the Imbaba suburb of Cairo, Giza and Alexandria to protest the latest cuts in bread subsidies.

In response Mohamed Mansour, a general in the security services, was seen on social media calling on people to “go hungry” and “sacrifice their dinners,” for the sake of the Egyptian economy.

Two weeks ago, the government announced further cuts to its electricity subsidies that will increase prices for factories by 42 percent and households by 21 percent.

Some 40 percent of Egypt’s nearly 100 million people live on less than $2 a day, while unemployment is rampant, particularly amongst youth. According to official statistics, youth unemployment in a country where more than 60 percent of the population is under 30 years of age is 26.7 percent; the real figure is no doubt far higher.

A new bankruptcy law—long demanded by investors—was adopted in January. The government also plans to sell stakes in several state-owned companies before the end of 2018.

Hikes in food prices and a nearly threefold increase in Cairo’s metro fares again led to protests last month—under conditions in which demonstrations are effectively banned—and clashes with the security forces during which 21 people were arrested.

El-Sisi has unleashed an extensive crackdown on all forms of dissent and political expression that far exceeds the worst excesses of Hosni Mubarak, who was overthrown by the mass uprising in February 2011. With more repression under way, his aim is to prevent another revolution.

The constitution is effectively a dead letter, with the country under a state of emergency supposedly to deal with “the dangers and funding of terrorism” in northern Sinai and the Delta area. All democratic norms have been jettisoned. Not only is torture in Egypt’s prisons widespread, the security forces have no hesitation in using lethal force against demonstrators in public. Prisons are being built to accommodate the more than 60,000 political prisoners, whose numbers are continually rising.

The last few weeks have witnessed a wave of detentions by the security forces, ostensibly for spreading false news, inciting against the state on social media or belonging to an “outlawed group.” The Muslim Brotherhood has disappeared from sight after el-Sisi’s massacre of 1,600 of its members and the imprisonment and forcible “disappearance” of thousands more following the 2013 coup. The detentions usually involve a dawn raid, a warrantless arrest, the confiscation of computers, books and phones, and cash.

Among those arrested were the satirical video blogger Shady Abu Zeid, leftist activists Shady Al-Ghazaly Harb, Amal Fathy, her husband and three-year-old-son, labour lawyer and member of the Revolutionary Socialists movement Haytham Mohamadeen, blogger and anti-torture activist Wael Abbas and Hazim Abdelazim, a prominent Egyptian opposition leader.

It was Abbas who, during the Mubarak era, published a video showing the police torture and sexual assault of microbus driver Imad al-Kabeer, which led to the conviction of the perpetrators in a landmark case in 2007. That inspired a wave of internet activism, which included the Facebook page “We Are all Khaled Saeed”. This commemorated Alexandrian victim Khaled Saeid, who was tortured and killed by the police in July 2010, sparking the mass protests that ousted Mubarak 18 days later.

Nothing is off limits for Egypt’s military junta. On June 5, the regime organised an attack by a gang of thugs on a Civil Democratic Movement’s iftar dinner party, breaking the daily fast during Ramadan. Dozens of politicians, writers and human rights activists were attending the dinner when the thugs entered the club and overturned the dinner tables, shouting “Traitors! Spies!”

The press functions as the mouthpiece for the government. Last year, three members of the journalists’ syndicate were sentenced to two years in prison and researchers Ismail Alexandrani and Hesham Gaafar were indefinitely detained. The Committee to Protect Journalists ranks Egypt as the third worst country internationally for imprisoning journalists.

The government also banned television stars Ibrahim Eissa, Yousri Fouda, and Bassem Youssef, frozen the assets of activists and civil society leaders Hossam Bahgat and Gamal Eid, and closed dozens of news websites. Vast sums are expended on developing and installing online-monitoring systems to track public internet usage.

A new press and media bill is going through parliament that grants even more powers to the government. It uses vague wording about “hatred”, “incitement”, the supposed “threat to democracy” and a clampdown on pornography to muzzle independent journalism and block personal accounts on social networking sites.

All this has the tacit consent of the Trump administration, which—like the Obama administration—views the murderous regime as a custodian of its regional interests and part of its coalition against Iran.

Similarly, the European powers have no qualms about the junta’s brutality and lawlessness, as they scramble to secure lucrative arms contracts and oil and gas concessions in Egyptian waters.

European corporations such as BP, Eni, Dassault, and Siemens lobbied their governments not to criticise the el-Sisi regime. Britain is the largest non-Arab investor in Egypt, with oil giant BP signing a lucrative £7.8 billion investment deal in the Nile Delta. Siemens signed one of the largest contracts in its history to build power stations and wind turbines in Egypt, while France has clinched deals worth billions of euros for warships and fighter jets.

Peru’s new president Vizcarra joins with Fujimorista opposition to impose austerity

Armando Cruz 

It has been two months since right-wing Peruvian President Pedro Pablo Kuczynski was forced to resign amidst a scandal over his buying votes to avoid an impeachment that was triggered by Kuczynski’s connections to the region-wide Odebrecht scandal. Vice-president Martin Vizcarra assumed power, while Mercedes Araoz remains as second vice-president.

Vizcarra appointed as his prime minister Cesar Villanueva, a former prime minister under the previous government of Ollanta Humala and congressman of the Alianza por el Progreso caucus headed by right-wing millionaire populist Cesar Acuña. Kuczynski himself has charged that Villanueva was one of the main plotters who forced his resignation and that he had been in closed-door talks with other parties negotiating deals for a post-resignation government.

Since then, the Vizcarra-Villanueva government has proven that Kuczynski’s removal was necessary for the ruling elite in order to impose new rounds of cuts to government spending and new taxes upon the working population, which are being demanded by international finance.

Prior to becoming Kuczynski’s vice-president, Vizcarra had been regional president of the southern Moquegua region, one of the country’s smallest provinces, whose economic life—as in most Peruvian regions—is dominated by the activities of mining multinationals (in Moquegua’s case, Southern Copper owned by Grupo Mexico).

After the revelations that Odebrecht had been bribing virtually the entire Peruvian political establishment and Kuczynski’s fall from grace, the whole bourgeois media (both from the “left” and the right) has been trying to cultivate Vizcarra’s image, presenting him as more of a “common man”. This is in contrast to Kuczynski, a son of European immigrants who, having spent decades working in Wall Street investment banking, held US citizenship until he renounced it in 2015 to run for president. The media has celebrated Vizcarra’s achieving a 57 percent approval rating when he took office.

In the first few days in power, the Vizcarra-Villanueva government entered into negotiations with the fujimorista Fuerza Popular (FP), the right wing party that controls Congress with an absolute majority of 61 seats, and whose obstructionist tactics had led to the isolation and eventual fall of Kuczynski’s government.

A truce was achieved between the two parties. FP agreed to give the new government a motion of confidence and approve its demand for special powers to execute a list of measures to “reactivate the economy, make changes in the North’s reconstruction (after the devastating floods early last year), fight against corruption, modernize the state and protect vulnerable populations”.

In return, the executive power agreed to grant Congress (and therefore FP) wider legislative powers and promised not to abolish Kuczynski’s pardon for Alberto Fujimori. The former president, and father of the current FP leader, had been serving a 25-year prison sentence for human rights abuses and corruption before being freed by Kuczynski last Christmas in a filthy deal to gain votes in order to survive a previous impeachment vote.

Vizcarra and Villanueva both defended their decision to establish friendlier ties with the fujimoristas, arguing that “confrontation” with them would lead to disaster. The move was nonetheless criticized by the pseudo-left as another indication that the fujimoristas have “kidnapped” the government and are manipulating its decision-making, just as they did, according to them, under Kuczynski.

Keiko Fujimori, the leader of FP and Alberto’s daughter who lost to Kuczynski in the last elections in 2016, reportedly accepted a non-obstructive relationship with the new executive in a bid to shed her image as a revanchist and vindictive leader in order to improve her chances in the next presidential election in 2021. According to reports, Fujimori’s approval rating has plummeted in the last months to 18 percent and trails behind two political newcomers: the right-wing Julio Guzmán and the current face of the pseudo-left, Verónika Mendoza.

Fujimori’s image was also hit by the revelations that she—as most presidential candidates in Peru—received bribes from Odebrecht and by the never-ending corruption scandals implicating FP members.

The fujimorista movement, it should be recalled, is probably the only political party that retains—at least until now—a modicum of support within the working class. As most left-wing parties and movements lost support and disintegrated in the 90s, Fujimori’s government exploited this vacuum with populist measures that created a constituency. Nowadays, Keiko Fujimori exploits this legacy, which is combined with right-wing policies such as a war on crime.

Once assured that FP would not interfere with their policies for the moment, the government, in early May, announced cuts in government spending and new taxes. Vizcarra approved a decree that would cut the equivalent of US$295 million in current government spending. Each ministry and department is to come up with a new budget adjusted to these cuts for next year.

Vizcarra and his Minister of Economy David Tuesta (former officer of one of Peru’s biggest banks) then announced a tax increase on carbonated drinks, alcoholic beverages, cigarettes, cars and diesel fuel. They argued that, along with the cuts in government spending, the new taxes were necessary to close a fiscal gap of nearly US$2 billion. Liliana Rojas Suarez, an influential economist, stated in an interview with El Comercio, that “the government is aware that international finance markets are observing the fiscal situation in countries. That’s why it is correct that they need to fix the budget deficit”.

Tuesta said in an interview that since 2011, fiscal income had declined, but admitted that 50 percent of that was attributable to a fall in the price of minerals (Peru’s biggest exports), and the rest was due to a decrease in tax collection.

In Peru, as with most undeveloped countries, giant multinationals—supported by imperialism—reject even the most minimal taxes. It is public knowledge that the state allows tax exemption for mining multinationals, private universities, private insurance companies, banks, casinos and other businesses. The money these capitalist endeavors should be paying to the state could cover the fiscal deficit many times over.

After these announcements, Tuesta then declared a new income tax on all those who earn less than S/. 2.000 (US$ 600) a month. Given that the minimum wage in Peru is S/.1000, the new tax income would fall upon the shoulders of the majority of Peruvians who struggle to live under terrible economic conditions. In the upside-down world created by modern capitalism, it is those who earn less who must be taxed more.

After this announcement, Pedro Francke, a political and economic analyst associated with the pseudo-left, wrote an article titled “Vizcarra is playing with fire”, in which he bemoans Tuesta’s decision to impose the new income tax on top of other regressive tax hikes. He then describes the deteriorating state of the economy: in April, economists declared that poverty in Peru had increased for the first time in an at least a decade, with 375,000 Peruvians falling in the last years under the poverty line. Meanwhile, unemployment has risen, with 424,000 jobs lost during this and last year. Francke claims that all of this “would have been a front-page headline in any other country”.

“Vizcarra ought to watch this situation very carefully”, he warns, calling attention to Kuczynski’s fate: “[…] He was indifferent to a similar situation and the deterioration of the economy brought his popularity to the floor and we know what happened next”.

Bus drivers and teamsters initiated a strike at the end of last month, which began in the city of Cuzco and extended to other cities in the south. They struck against the increased tax on diesel fuel and the proposed income tax.

The strike and the massive opposition towards the new taxes shook the government and made it retreat. Tuesta and others in the government issued contradictory statements about their proposed plans. He wanted to continue with the new taxes but the rest of the government was already announcing the cancellation of the new income tax and the reduction of other tax hikes. Then the Ministry of Transportation and Communications unilaterally announced a reduction in the new diesel fuel tax in an accord with the transportation workers’ union. Tuesta went to speak personally with the president and told him it was a bad message for international finance, but Vizcarra rejected going ahead with the planned hikes. Tuesta resigned a few days later.

The government’s sudden retreat on its fiscal agenda in the face of a limited strike has exposed its massive weakness and fragility. Like Kuczynski’s administration, it is a government with barely any real support amongst the population, and the new taxes had swiftly driven down Vizcarra’s approval ratings, from 52 percent in April to 37 percent in June.

Under these conditions, the pseudo-left is attempting to salvage the new government by not directly confronting Vizcarra. Instead, just as they did when Kuczynski governed, they blame nearly everything on the fujimorista-dominated Congress and its influence on the executive branch.

While it is true that Vizcarra and Villanueva have caved to the demands of the fujimoristas and are bargaining for their approval of the government’s reactionary measures, the notion that the government would be different and “serve the people” should the fujimoristas lose control over Congress, is creating a politically toxic and dangerous situation.

Thousands of young people have taken part in protests in the last months demanding that Congress be shut down and new elections be held. While many of the protesters are genuinely disgusted by FP—a haven for semi-criminal elements from the political underworld—and its control of Congress, this is exactly the same thing that Alberto Fujimori himself did in 1992, when he shut down Congress and initiated a semi-dictatorship that lasted until his downfall in 2000.

Allowing the executive power once more to shut down Congress would not do anything to improve democracy in Peru. On the contrary, it would grant the state the power to do whatever it sees fit in the future and embolden the most authoritarian tendencies in the ruling elite (whether they are fujimoristas or not).

The pseudo-left’s role has consistently been that of subordinating social opposition to the dominance of bourgeois politics. This was the case when they called for a vote for Kuczynski during the last elections in order to defeat Keiko Fujimori. Then the Frente Amplio and Nuevo Peru caucus in Congress defended Kuczynski’s government every time it entered into conflict with the fujimoristas. They refuse to challenge the whole bourgeois order, instead denouncing only the most right-wing faction—the fujimoristas—and giving tacit support first to Kuczynski and now to Vizcarra.

Bangladesh government intensifies “anti-drug” crackdown

Wimal Perera

Bangladesh Prime Minister Sheikh Hasina’s “anti-drug” crackdown has entered its second month, with more than 150 people killed and about 21,000 arrested since May 15.

Hasina’s government has given a free hand to the police and its notorious Rapid Action Battalion (RAB).

The Daily Star reported on June 14 that “mobile courts” established by Hasina’s Awami League-led government to carry out quick show trials have already sentenced over 3,520 suspects to jail terms of between seven days and two years.

The government claims that its campaign seeks to “save the country from the drug menace.” Its real purpose is to further strengthen the country’s repressive state machinery. The crackdown is being used to target political opponents and suppress the mounting opposition by workers, youth and the oppressed masses to Hasina’s big business policies.

Last month, Habibur Rahman, a 42-year-old activist for the Bangladesh Nationalist Party, the main right-wing opposition party, was taken from his local mosque in Chittagong by men thought to be plain-clothes officers and later killed in custody.

One of Rahman’s relatives told the Telegraph on June 1: “He was neither a drug seller nor a drug addict. It was because he was involved in politics against the government and protested about land affairs.”

Addressing parliament on June 20, Hasina declared that her government would introduce anti-narcotics legislation that included the death penalty. She said the “special drives” against “drug-related criminals” were based on “zero tolerance.”

According to New Age, the anti-drug campaign is so terrifying that government opponents did not “dare to hold protests against the extrajudicial killings outside the capital.”

Protesting students who organised a human chain in Dhaka’s Shahbag neighbourhood against extrajudicial killings on June 6 were baton-charged by police and a leading activist, Imran H. Sarkar, detained and held for seven hours.

The government’s state-endorsed violence and political assassinations have been widely condemned. Early this month, UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein criticised the crackdown. He described official declarations that none of the victims was innocent as “dangerous … and indicative of a total disregard for the rule of law.”

The UN statement demanded the campaign be “immediately halted.” It added: “Given the large number of people arrested, there is a high likelihood that many people may have been arbitrarily detained, without due regard for their rights.”

The Bangladesh Mahila Parishad (Women’s Council of Bangladesh), a human rights organisation, denounced the killings and demanded legislation to make the law enforcement agencies “accountable for human rights violations.”

Supreme Court Bar Association president Zainul Abedin demanded the government to stop “extra-judicial killings” to follow “the due process of the law.” Human Rights Watch Asia director Brad Adams said: “Until this spate of killings is independently investigated and proper procedures are put in place to protect the public, the campaign should be suspended.”

These appeals will change nothing. Any inquiry organised by the Hasina government will be a cover-up to protect the state forces and their murderous operations.

Hasina has dismissed condemnations of the repression, claiming that those killed are all drug dealers. “You might think that this is a violation of human rights,” she said, but “could you show me one innocent person who has been caught up in the middle [of this]?”

Home Minister Asaduzzaman Khan told CNN the campaign will continue until the problem is brought under control.

As anger mounted against the repression, the Stalinist Communist Party of Bangladesh (CPB) and Socialist Party of Bangladesh (SPB) announced they would join protests against the extrajudicial killings. The CPB and SPB, however, tacitly support the crackdown, advising the government to “curb the drug menace with iron hands through strict enforcement of the law.”

On June 14, US State Department spokesperson Heather Nauert issued a statement voicing “concerns.” She urged the government “to conduct thorough and transparent investigations into all credible reports of extrajudicial killings” and “to fully meet its human rights obligations.”

Washington’s concern is bogus. The killing of innocent civilians, mainly youth, by police shootings, has been commonplace in the US under the both the Trump and Obama administrations, as is the arrest and jailing of so-called illegal immigrant workers and their children.

The US regards its relations with the Hasina government as crucial to its geo-political interests in South Asia and its military and economic efforts to undermine China’s influence in the region. Washington’s real concern is that mass opposition to Hasina’s measures will draw in key sections of the working class fighting for higher wages and better working conditions and destabilise her regime.

The government mobilised thousands of police in the lead-up to the June 15 holiday marking the end of Ramadan, worried that ongoing demands by garment workers over unpaid wages and religious festival allowances could erupt across the country. In Chittagong, metropolitan police commissioner Mahbubur Rahman deployed 4,000 police and plain-clothes officials across the city “to avert any untoward situation.”

There has been no national strike action, but hundreds of garment workers from the Paradise Group, Westeria Textile and Positive Fashionwear in Dhaka demonstrated earlier this month to demand unpaid wages and allowances.

Tens of thousands of non-government teachers are also in conflict with the government because it has not included them in the Monthly Pay Order (MPO). They say the government, which previously promised to pay them under this system, ignored them in the 2018–2019 budget.

Under the MPO, the government pays salaries and benefits to teachers of non-government schools, colleges and technical institutions. There are about 80,000 teachers of 5,000 non-government schools, colleges and technical institutions. The dispute remains unresolved.