California fast food restaurants conduct mass layoffs in retaliation against state minimum wage increase

Dan Conway

A Pizza Hut restaurant is seen in Los Angeles. [AP Photo/Associated Press/Reed Saxon]

Multiple California fast food restaurants have begun mass layoffs and other cost-cutting measures in advance of the April 1 enactment of a new state minimum wage law. Wages would increase for fast food workers from the current poverty-level $16 per hour to an only slightly less onerous $20 per hour.

In December, two large Pizza Hut franchise operators announced that they would be laying off all in-house delivery drivers in favor of paid delivery services, such as Doordash and Uber Eats. Excalibur Pizza, which owns the Round Table Pizza chain, also announced that it would eliminate 73 driver positions by mid-April as well.

Approximately 1,100 Pizza Hut delivery drivers are set to lose their jobs across the state. This is despite the fact that Yum Brands, owner of Pizza Hut, had gross profits of $5.302 billion for 2023, a 4.02 percent increase over the previous year.

Other chains, including Mexican-themed chicken restaurant El Pollo Loco and hamburger restaurant Jack in the Box, announced that they would begin utilizing robotics to automate some operations, including salsa making and fry stations. Hiring freezes have also been announced in nearly every other fast food chain.

McDonald’s and Chipotle Mexican Grill also announced in November they would be increasing prices to offset the minimum wage increase. The McDonald’s announcement follows nationwide price increases of 10 percent in 2023 at the fast food behemoth. Since 2019, prices at fast food restaurants overall have increased an average of 30 percent.

The new law, California Assembly Bill 1228, establishes the new minimum wage for all those restaurants classified as “limited service,” meaning that limited or no table service, i.e., wait staff, is offered and that all food and beverage items are purchased before being consumed. Furthermore, only those chains with more than 60 locations nationwide are subject to the new provisions.

The new legislation also creates a nine-member “Fast Food Council” with the authority to annually increase wages by the lower of the Consumer Price Index or 3.5 percent, guaranteeing that under current inflationary trends workers continue to receive cuts in real pay each year.

More than 500,000 California workers are employed in the fast food industry, while more than 70 percent of Californians consume fast food at least once per week, largely due to time and budgetary constraints faced by broad sections of the working class.

With fast food workers working between 16 and 34 hours each week, a $4 an hour minimum wage increase will result in these workers seeing increases in weekly pay between $64 to $136 per worker before taxes.

Many of these workers live in extreme poverty and often rely heavily on private and public support programs to survive. A $20 per hour wage will still leave most fast food workers highly impoverished.

Ironically, it will disqualify many of these workers from state assistance, such as the CalFresh food assistance program, which has an abysmally low income threshold of $18,954 for a one-person household and $25,636 for a two-person household.

This is considered a major drain to the state’s finances with the state’s Legislative Analyst’s Office recently announcing a projected budget deficit of $58 billion. Major spending cuts to social programs such as education and food assistance are either being considered or already being implemented.

The minimum wage bill’s passage was supported by the Service Employees International Union (SEIU), which also last month announced the creation of a new California Fast Food Workers Union.

Joseph Bryant, international executive president of SEIU, proclaimed while announcing the union last month, “The idea of it [the union] is to really build the voices by bringing hundreds and eventually thousands of workers together to be able to make demands, to be able to ensure they are getting treated with the respect and dignity they deserve.” Workers are to pay $20 a month for membership in the new union.

Unlike traditional unions, the Fast Food Workers Union has no collective bargaining rights with the restaurant employers. Instead, the SEIU has promised that the workers will be “represented” by the Fast Food Labor Council, whose 11 members consist of representatives from both the union and the fast food industry and all of whom will be appointed by Governor Gavin Newsom and the state legislature.

The council is an advisory body only, and its recommendations for restaurant standards will be sent to state labor agencies for consideration. It does not have the ability to impose new benefits for employees, such as additional paid time off or fair scheduling policies. Once the council’s recommendations are sent to the agencies, they can either ignore or revise the recommendations however they see fit.

Proponents of the new council, including the trade unions and the pseudo-left, cynically argue that the councils increase the negotiating power of workers through the use of so-called sector bargaining wherein conditions for entire industries are set rather than local agreements made in piecemeal fashion. California SEIU President David Huerta hailed the new fast food council as putting “power in the hands of workers to improve conditions across the entire industry.”

In reality, this is a corporatist body, drawing together the union bureaucracy, major corporations and the government to jointly suppress wages. It is strikingly similar to the infamous wage board set up by the Nixon administration in the early 1970s, with the exception that that body aimed to limit wage increases to 5 percent a year, not 3.5 percent.

The trade unions were eventually forced to quit the wage board following massive opposition in the working class, and the ultra-conservative AFL-CIO President George Meany denounced it as the “first step towards fascism” in the United States.

However, by the 1980s, the trade unions began adopting corporatism as their official policy as they moved sharply to the right and began working with the employers to limit wages and enforce mass layoffs.

It is a striking sign of how far to the right the so-called “left” factions of the Democratic Party are that the Fast Food Council has been promoted by fake progressive Democrats, such as Bernie Sanders and Elizabeth Warren.

“It is likely we’ll see a continued push for more sectoral labor standards,” said UC Berkeley Labor Center Co-chairperson Ken Jacobs in reference to the new Fast Food Council. Jacobs noted that traditional collective bargaining is likely to become less prevalent statewide in favor of “the user of labor standards boards in certain industries, where the structure of the industry makes traditional collective bargaining more difficult.”

In fact, the new Fast Food Council is simply a reintroduction of California’s Industrial Welfare Commission. Dormant for more than 20 years, the commission was an industry-led group working in collusion with union representatives and Sacramento politicians to set wages and work standards.

New Zealand sinks into recession amid escalating assault on jobs, social conditions

John Braddock

A blunt headline reading “Austerity bites” was emblazoned across the front page of the Post newspaper in New Zealand’s capital city, Wellington, on March 22. Referencing an aggressive tactic used in rugby union scrums, the subhead declared: “Rolling maul of public service job cuts begins.”

New Zealand Prime Minister Christopher Luxon with Finance Minister Nicola Willis [Photo: Facebook/Nicola Willis MP]

A day earlier Statistics NZ revealed that the country slid into recession in the December 2023 quarter. The economy contracted 0.3 percent in the three months ended September, followed by another 0.1 percent in December. The inflation figure was 4.7 percent.

The economy has shrunk in four of the past five quarters, driven by the Reserve Bank’s policy to ramp up unemployment as a battering ram against any wages push by workers who face soaring living costs. The official unemployment rate rose 0.6 percentage points during 2023, from 3.4 to 4.0 percent, and is projected to exceed 5 percent this year.

The Post article appeared at the end of a week dominated by announcements from the far-right National Party-ACT-NZ First coalition government of mass sackings, cuts to public services and attacks on working conditions.

Impending public service job cuts “could be in the thousands” according to the Post. In just one day, two key ministries—the Ministry of Health and Ministry for Primary Industries (MPI)—announced a total of 550 losses. The Ministry of Business, Innovation and Employment (MBIE) opened a second round of “voluntary” redundancies covering expanded work areas.

Finance Minister Nicola Willis has ordered savings of 6.5 or 7.5 percent across the public sector, requiring departmental heads to determine how to execute the brutal measures. The Health Ministry is looking at a 25 percent reduction of staff, around 180 jobs, while MPI is proposing a 9 percent cut of 384 jobs.

Wellington, with a metropolitan population of 422,000 and an economy depending largely on its public sector workforce, will be hard hit. A spokesperson for recruitment agency Robert Walters said it was already seeing skilled workers looking to move to Auckland and Australia.

Underscoring the government’s vindictive attitude towards the entire working class, the far-right ACT Party leader and cabinet minister David Seymour posted on Twitter/X in response to the MPI job losses: “Good.” Willis airily dismissed widespread anger over the cuts, saying: “I am sure there will be other job opportunities.”

Public services are being scrapped or deferred to fund the government’s tax cuts to benefit the wealthy. Some of the most vulnerable layers of the working class are in the firing line.

Last week the disabled community found out via a Facebook post that funding was being reduced for a wide range of support payments, including for equipment such as wheelchairs, communication devices and housing and motor vehicle modifications. School lunch programs are facing cuts of up to 50 percent; and free bus fares for 5–12 year-olds and half fares for 13–24 year-olds will be scrapped, increasing the financial burden on already struggling families.

Large scale cuts to infrastructure and essential services are being foreshadowed as a wedge for privatisations. Education Minister Erica Stanford announced that 20 school building projects have been paused and another 350, ranging from design to pre-construction, could be scaled down or scrapped. She indicated that private-public partnerships could be used to build new schools.

A similar situation faces the ageing Cook Strait inter-island ferries whose scheduled replacement has now been cancelled. Half a billion dollars is also being cut from public science funding.

The sweeping austerity program is designed to underpin a massive transfer of wealth to the rich. The central promise of National’s campaign in last year’s election was for $NZ9 billion in income tax cuts over four years, heavily favouring top income earners.

According to Newsroom, after increased costs from a $2.9 billion tax cut for landlords, the government faces a $1.5 billion fiscal gap. In unprecedented criticism of the government of which he is part, NZ First leader and Deputy Prime Minister Winston Peters signaled last week that there is in fact a “fiscal hole” of $5.6 billion in National’s budget figures and he could not see how Willis was going to fix it.

The tax cuts will be paid for with even deeper spending cuts, reallocation of revenues, or borrowing. The last option raises the spectre of a crisis similar to that triggered by former UK Prime Minister Liz Truss, who proposed to cover unfunded tax cuts with large-scale borrowing, triggering financial chaos and her rapid political demise in 2022.

The International Monetary Fund (IMF) on March 20 warned that New Zealand’s tax cuts would be inflationary, called on the government to keep spending low and opposed more borrowing. The IMF repeated previous calls for a comprehensive capital gains tax and a land tax, which the government has rejected.

Sections of the ruling elite fear an upsurge of class struggles. The social crisis—for which the last Labour government was equally responsible—is pushing workers to the left and fueling hostility towards all the major political parties. The political establishment’s support for US imperialism against Russia and China, and the US-backed genocide in Gaza, is also radicalising workers and young people.

The corporatist trade unions are doing everything they can to block any struggle by workers against the far-right government. Apart from a handful of pleading press releases, not one union has announced any plans to fight the onslaught. The Public Service Association simply called MPI cuts a “reckless gamble” and complained that promises to generally restrict cuts to “backroom staff” were not being kept.

The National-led government was scrabbled together after October’s election, which was characterised by mass disaffection. Labour’s share of the vote collapsed amid widespread anger in the working class over its austerity program. After just over 100 days in office, the coalition is already in an escalating crisis. Willis, who had boasted last September, “I’d quit as finance minister if my tax cut plan fails,” is facing demands for exactly that.

Business commentator Fran O’Sullivan wrote in the Weekend Herald on March 23 that former National Party Prime Minister John Key had met with Prime Minister Christopher Luxon and urged him to pull back. Key warned Luxon against “risking plunging the country into so much discontent their program has to be abandoned and they don’t get re-elected.”

Right-wing commentator for the New Zealand Herald, Matthew Hooton, derided National’s “ludicrous” tax plan, saying it was “largely written by lobbyists, doesn’t add up and would cause higher inflation and higher interest rates than even Labour, despite the full benefits going to only 0.18 percent of households.”

The Labour opposition is now embroiled in its own crisis over tax policy. In a desperate attempt to recover ground from the party’s drubbing at the election, leader and former Prime Minister Chris Hipkins last week hypocritically called for a public debate on a new “progressive” tax system. In fact, after six years in government during which Labor did nothing to change the “unfair” tax system, Hipkins entered last year’s election declaring wealth taxes were off the table.

UPS outlines plans to close at least 200 facilities

Jacob Crosse

In an investors presentation held Tuesday in Louisville, Kentucky, top executives of United Parcel Service (UPS) announced plans to shutter 200 facilities in the United States and lay off thousands of workers, as part of their plans for the “Network of the Future.”

While previous layoffs have already been reported extensively by the WSWS, this is the first time that UPS has issued its comprehensive nationwide plan to slash jobs. UPS executives estimated that the company would save $3 billion by the end of 2028 by consolidating facilities and implementing automation at the remaining hubs.

Earlier this year, UPS announced it would be laying off 12,000 salaried employees. This was quickly followed by mass layoffs of pre-loaders at facilities across the United States, including in New York and California. The ongoing jobs bloodbath at UPS is part of a wave of layoffs at the company and in virtually every industry across the globe.

The cuts are being enabled through the collaboration of the International Brotherhood of Teamsters, which rammed through a sellout contract last summer by deliberately concealing that these cuts were coming. Tuesday’s presentation underscores the urgent need for workers to take matters into their own hands, organize a rebellion against both management and the sellout artists in the union bureaucracy.

It also fully confirms the warnings made at the start of the year by the UPS Workers Rank-and-File Committee that “New technologies are being rolled out that can eliminate almost all of the work inside the warehouses. The jobs of nearly 200,000 part-timers at UPS are at risk.” That statement called for a “counter-campaign” by workers to defeat the attack on jobs.

In their slides presented to investors Tuesday, UPS executives outlined 63 sites in the US that would be targeted for automation by the end of 2028. These include hubs in Albany and Syracuse, New York; Mesquite, Texas; as well as Hartford, Chelmsford and Providence, Massachusetts.

A map showing where UPS plans to initiate "major automation projects" by the end of 2028. [Photo: UPS]

Some of the facilities that will be consolidated—that is, closed—include the Windsor, Ashland, Leominster and Nashua Hub in Massachusetts. In Albany, New York, the NY Capital Village Center will be closed, as will the Chalk Hill Center in Texas.

A map of the state of Massachusetts showing where UPS plans to shutter certain facilities, and transform others into automated hubs. [Photo: UPS]

In his slide presentation, Nando Cesarone, president of US domestic operations at UPS, emphasized that the “Network of the Future” would bring “new automation and technology tools to materially improve productivity.”

This “highly productive network” will operate with “less dependency on labor,” a slide in Cesarone’s presentation explained. Another of his slides, titled “Actions We Are Taking Right Now” to increase “operating margin,” listed “Building and Sort Closures” as the top item.

Cesarone confirmed that UPS would be closing “40 sorts this year, up from 30 in 2023,” but he stressed that “every single work area is being scrutinized for automation opportunities, not just our sortation hubs,” per Freightwaves.

Automation and Consolidation projects in Texas. [Photo: UPS]

In his presentation, Bala Subramanian, chief digital and technology officer for UPS, highlighted the “strategic bets” the company was taking to boost profits. “Artificial Intelligence and Gen AI” and “Robotics and Automation” were the top items listed.

The last major presentation made clear how these cost savings would be squandered on the company’s wealthy investors. Chief Financial Officer Brian Newman outlined the “Capital Allocation Policy/Priorities” for the company; two of the four listed were a “stable and growing dividend” for shareholders and to use “excess cash” to “repurchase shares.”

Executives did not place an exact figure the number of layoffs. But in an interview with Bloomberg Television following the presentation, UPS CEO Carol Tomé confirmed the company planned to boost profits by raising prices, including a 5.9 percent general rate increase this year, and automation.

UPS CEO Carol Tomé on Bloomberg, March 26, 2024. [Photo: Bloomberg]

Asked by her Bloomberg host to elaborate on the “layoffs coming,” and “what more should investors expect?” Tomé replied, “We have got to right-size our business, so we did make some decisions to do just that under our operating model of fit to serve. Moving past though, is the very exciting opportunity that we have to drive out costs through automation.

“Did you know we have over 1,000 buildings in the United States? And many of these buildings were built 50, 60 years ago. ... As we looked at the buildings we said, ‘My gosh, we have an opportunity, actually, to consolidate buildings ... that aren’t automated into brand new, automated buildings and drive productivity.”

By end of the “initial phase,” Tomé said UPS would have “400 buildings that are fully automated.”

“And with this automation,” she added, “we are going to drive out costs. We will drive out $3 billion in costs between now and 2028,” with “half of that” being “realized by 2026.

“And with end-to-end automation ... we don’t need as many people to move the packages inside the buildings that we have today,” she said.

In an interview with CNBC the same day, Tomé explained that the company’s plans for mass layoffs was fully realizable due to “the cost nature of our new Teamster contract.”

“We are very pleased with that contract,” Tomé said. “The compounded annual average growth rate of wages and benefits is 3.3 percent over a five-year period, but it is front-end loaded.

A slide highlighting the role of the Teamsters bureaucracy in providing “Labor Certainty” so that UPS can implement its cost-cutting automation plans. [Photo: UPS]

“So ... in year one we want to grow our volume and our revenue and our operating profit dollars,” she continued. “And then in years two and three we want to grow volume, revenue and operating profit margin.

“Why will margins expand past year one? Because we are going to anniversary the first year of the Teamster contract in August, and the cost growth rate drops dramatically after that.”

Describing the “Network of the Future” as “one of the most exciting initiatives” in the last 100 years of the company, Tomé lamented that while the UPS delivery network was highly “integrated,” it was “old.”

The company is “going to collapse some buildings that we don’t need any longer into larger, more automated buildings,” she said. “We will invest to make this happen, we will invest about $9 billion over five years, but in that five-year time frame, we will enjoy $3 billion of savings, of which 50 percent will be recognized within the first three years.”

The Teamsters bureaucracy, which has said next to nothing about the layoffs this year, continued its guilty silence after Tuesday’s conference. Neither Teamsters President Sean O’Brien, nor the Teamsters social media accounts have released a statement yet on the pending destruction of thousands of jobs, or what plans the Teamsters have to fight against the layoffs.

The silence of the union bureaucrats is not a mistake. They knew automation and the cuts it would entail were coming, yet they did nothing to fight to defend workers’ jobs. Instead, they blocked UPS workers from striking together with actors and writers, who were already on strike and eager for reinforcements, and instead sold the rotten contract as “historic.”

However, news of Tuesday’s presentations spread like wildfire among UPS workers. “It’s getting crazy here. They cut our hours again,” a UPS worker from Philadelphia told the WSWS. “They laid off a pregnant woman today. She is having twins and has two kids at home. It’s horrible.”

José, an over 20-year UPS worker in Southern California, told the WSWS, “Hours are being cut. I know management wants to automate small sort in my hub.”

Joseph, a feeder driver out of Chicago, said he was “worried” about his co-workers “inside the buildings.

“Two hundred facilities in the next four years, wow! How many jobs will be cut? Remember, Carol Tomé clearly said this new contract bites in the beginning but ridiculously smooths out in UPS’s favor in the later years.”

Sudan’s “forgotten war” leads to epic suffering and regional instability

Jean Shaoul

Last week, United Nations (UN) relief agencies warned the Security Council that Sudan is suffering one of the world’s worst humanitarian crises in recent history, after nearly a year of gruesome fighting between rival factions of the Sudanese armed forces for control of the country.

Sudan faces a famine of biblical proportions because of the war, displacement, the breakdown of the economy and the almost total absence of international aid. Many building in the capital Khartoum have been destroyed. The government, virtually bankrupt, barely functions.

Sudanese refugees displaced by the conflict in Sudan gather to receive food staples from aid agencies at the Metche Camp in eastern Chad, March 5, 2024 [AP Photo/Jsarh Ngarndey Ulrish]

Fighting broke out in April 2023 between the army, headed by General Abdel Fattah al-Burhan, leader of the Sovereign Council and de facto ruler of the country, and his deputy Mohamed Hamdan Dagalo, better known as Hemedti, who heads the paramilitary Rapid Support Forces (RSF).

The RSF, based in the western Darfur region, has taken control of the west of the country and most of the capital Khartoum, although it is struggling to hold onto these gains. Al-Burhan, despite backing from Egypt’s military regime, South Sudan and Saudi Arabia has yet to win a major battle. He has retreated to the east and Port Sudan, on the Red Sea.

Both factions, composed of rival sub-ethnic groups with competing interests, have the support of various local militias, leading to fighting often along ethnic lines, as well as support from outside forces. They are mobilising for a long war in the east of the country.

According to the Armed Conflict Location and Event Data Project, there have been 13,900 reported fatalities across Sudan, while the Health Ministry has reported 27,700 people injured between 15 April 2023 and 26 January 2024.

The UN highlighted “mass graves, gang rapes, shockingly indiscriminate attacks in densely populated areas” and the displacement of 8.1 million of Sudan’s 45 million population, including at least 1.76 million that have fled to neighbouring countries also wracked by poverty and instability.

According to the UN, “at least 25 million people are struggling with soaring rates of hunger and malnutrition” and 3.8 million children under the age of five are malnourished. Aid agencies say that children in refugee camps in Darfur are dying of hunger every two hours. Martin Griffiths, head of the UN’s Office for the Coordination of Humanitarian Affairs (OCHA), warned that “almost five million people could slip into catastrophic food insecurity in some parts of the country in the coming months.”

Cholera has broken out. At least 292 people have been killed by the disease and there were over 10,700 suspected cases as of 17 February 2024.

Compounding the crisis is the disruption to farming by the fighting. The Middle East Eye cited the Sudanese organisation Fikra for Studies and Development as reporting, “Only 37 percent Sudan’s agricultural land has been cultivated in comparison to previous years. Also, Sudan’s national wheat production has reduced by 70 percent.”

With international attention focused on the US/NATO led war against Russia in Ukraine and Israel’s genocidal war on Gaza, Sudan’s war and its wider implications have been all but ignored. The UN relief agencies have called for $2.7 billion of assistance for this year, but they have received pledges for just $135 million. Last year, just 43 percent of the target was raised. The miserable funds testify to the prevailing view among the imperialist powers that Sudan’s impoverished people are surplus to requirements.

The two army leaders fighting to control Sudan rose to prominence during the war in Darfur, in which 300,000 people were killed and 2.5 million displaced in fighting from 2003 to 2008. Al-Burhan headed the army, while Dagalo led the notorious Janjaweed militias responsible for some of the worst atrocities of the conflict. Dagalo has since become enormously rich based off Darfur’s gold. Both men were implicated in war crimes and crimes against humanity.

Fighting between these two corrupt figures erupted in no small part due to longstanding efforts by US imperialism and other regional powers to exert control over Sudan and its resources—gold, minerals, oil and agricultural land—and cut off Khartoum’s relationships with China, Russia and Iran that all have growing economic interests in the region.

The country saw its first military coup within three years of independence from Britain in 1956, aimed at suppressing the working class and tenanted farmers whose struggles had rapidly politicised as key export prices fell, threatening the economy with collapse.

Since then, the country has been riven by recessionary wars, violence and intrigues, spread across its unstable neighbours. These conflicts testify to the multiple, competing interests in the conflict-ridden Sahel region and the Horn of Africa, strategically located on the Red Sea through which 20 percent of global container shipping passes.

The expansion, spurred on by the International Monetary Fund, the World Bank and Gulf investors, of commercial, export-oriented agriculture, has been characterised by violent expropriation, rampant exploitation, deep inefficiencies, and ecological destruction which in turn spurs more land grabs. This has torn apart traditional ways of life, created severe food insecurity in one of Africa’s most fertile regions and fueled tensions between communities.

Apart from a few brief periods, Sudan has been subject to military rule or military-backed dictatorships that ruthlessly quashed all dissent on behalf of the country’s tiny elite.

Al-Burhan first came to prominence in April 2019, when, following months of mass protests across the country and with the support of the United Arab Emirates and Saudi Arabia, he led the pre-emptive military coup that overthrew President Omar al-Bashir and his Muslim Brotherhood-affiliated military dictatorship.

The protests were fueled by Sudan’s economic collapse, precipitated by the US-brokered secession of oil-rich South Sudan in 2011, poor harvests and floods that led to soaring food and fuel prices, widespread poverty, political instability, conflicts and the displacement of some 3 million people.

The aim of the military was to prevent the overthrow of the entire state apparatus and the expropriation of their own substantial financial and corporate institutions that control much of the Sudanese economy. Al-Burhan opened negotiations with leaders of the protests, the Forces of Freedom and Change (FFC), an umbrella group of 22 bourgeois and petty bourgeois groups, including the professional trade unions and the Sudanese Communist Party, over the formation of a joint military-civilian government to provide a cover for the military, while carrying out the economic measures needed to remove US sanctions and access international loans.

Just weeks afterwards, soldiers and paramilitaries massacred more than 1,000 unarmed protesters, chasing them through Khartoum, tying concrete blocks to their feet and throwing them into the Nile. In October 2021, Abdalla Hamdok’s transitional “technocratic” government, made up of “leftists” and serving as a front for the Sovereign Council headed by al-Burhan, threatened the military’s privileged commercial and political interests. Al-Burhan sacked it, resuming military rule alongside Islamists and other reliable allies of the al-Bashir regime.

Eighteen months later, war broke out between al-Burhan and Dagalo following mounting tensions over the planned integration of the RSF, and other former rebel militias involved in insurgencies in various parts of the country, into the Sudanese army.

Al-Burhan’s faction has supported the US/NATO war against Russia in Ukraine and was backed by Egypt until Cairo was forced to back off by its paymaster, the UAE, which has become increasingly entrenched in the region.

According to the New York Times, the UAE is covertly shipping weapons to the RSF, as well as to Libyan warlord Khalifa Haftar who controls the Tobruk government in eastern Libya. Abu Dhabi has also supported neighbouring and landlocked Ethiopia’s controversial agreement with the internationally unrecognised breakaway Somaliland for access to the port of Berbera, developed by UAE’s DP World.

Somalia, along with its allies Qatar and Turkey, views this as an attack on its territorial integrity and has recalled its ambassador from Addis Ababa.

Dagalo has courted support from Somaliland and Ethiopia, as well as Chad, all increasingly dependent on UAE investment, threatening more regional instability. Further afield, his control over the export of Sudanese gold has fostered close connections with Russia, which buys via the UAE, enabling the Putin government to bypass NATO sanctions.

Moscow, whose Wagner mercenaries operate in Sudan, eastern Libya and neighbouring Central African Republic, is trying to establish a base at Port Sudan. There have been rumours and unverified reports of Ukrainian forces active in the country, targeting Russian operatives.

With the Horn of Africa, the Sahel, North Africa and the Red Sea basin becoming key battlegrounds for competing interests, an infuriated Biden administration has been unable to broker any agreement either among its own regional allies or between Sudan’s rival gangsters, with its special envoys to the country each quitting after a few months in post.

Google Creative Fellowship 2024

Application Deadline:

The deadline for the Google Creative Fellowship 2024 program is April 5th, 2024.

Benefits Google Creative Fellowship 2024:

Successful candidates will

• Get paid. The salary is dependent on the location of the applicant and will be made known during the interview process. 
• Get to work for six months in a paid contractor role where candidates will be employed as freelancers via one of Google’s staffing partners.
• The Creative Fellowship is a Google program for emerging creative talent that offers ongoing mentorship, helpful networking opportunities, and hands-on experience across Google’s various in-house creative teams.

Eligibility Criteria:

Interested applicants for the Google Creative Fellowship 2024 must meet the following requirements:

• Must be an emerging creative thinker (0 – 5 years of creative experience) who has a clear point of view and passion for making things and telling stories.
• Must be an individual excited to bring their unique voice and craft to Google’s creative teams.

Also, interested candidates must ensure that:

• As of June 2024, they have work authorization in the United States. They do not require a visa or sponsorship to work.
• As of June 2024, they are of legal age to work in the United States.
• They can speak and write English fluently.
• They will be living in the city in which you are applying for a role. (Locations are listed in the individual role descriptions.)
• They can commit to a full-time position on the Creative Fellowship for six months (mid-June 2024 – mid-December 2024).
• They understand that you will be employed as a freelancer via Google’s staffing partners.
• They have read the FAQs and understand what’s required for the application process.

Note: Each creative team at Google is looking for something different, so they encourage creatives to apply with work that best captures their craft.

Application Process

To apply for the Google Creative Fellowship 2024

• Visit the official website
• Read through the page and fill out the application form for the designated role
• Before submission, confirm you have reviewed the following requirements to ensure you can fully commit to the program.
• Also, if you have a disability or special need that requires accommodation, send an email to creative-fellowship@google.com for help. 

For more information, visit the official website.

“Unprecedented” growth of US debt could bring market shock

Nick Beams

The US could be on course for a crisis in its bond market, replicating that which hit the UK in September 2022 when financial markets went into turmoil after the short-lived Liz Truss Tory government proposed major tax cuts funded by an increase in government debt.

A trader works on the floor of the New York Stock Exchange [AP Photo/Craig Ruttle]

The UK crisis, which required intervention by the Bank of England, had its own peculiarities bound up with the operations of pension funds. But it may well have been a foretaste for a much bigger crisis that could engulf the US financial system.

This scenario was outlined by Phillip Swagel, the director of the Congressional Budget Office (CBO), in an interview with the Financial Times (FT) yesterday. He said growing US government debt was on an “unprecedented” trajectory risking the kind of crisis which led to the collapse of the Truss government.

“The danger, of course, is what the UK faced with former prime minister Truss, where policymakers tried to take an action, and then there’s a market reaction to that action,” he told the FT.

He said the US was “not there yet” but warned it could be, with the increase in interest rates raising the cost of payments to $1 trillion in 2026 creating conditions for bond markets to “snap back.”

Swagel did not go into details of its form, but a “snap back” could result in a sell-off of government debt, leading to a rise in market interest rates [as bond prices fall interest rates rise] and liquidity problems.

The CBO has said federal government debt was $26.2 trillion at the end of last year, equivalent to 97 percent of gross domestic product. It has forecast significant increases in coming years, not lest because of rising interest rates.

Back in February it said the US budget deficit was set to rise by almost two-thirds over the next decade from $1.6 trillion to $2.6 trillion with much of the increase due to higher interest costs.

The CBO said that interest payments would account for around three quarters of the rise in the deficits between today and 2034. The deficit as a proportion of GDP would rise from 5.6 percent in 2024 to 6.1 percent in a decade’s time, well above the average of 3.7 percent over the past 50 years.

The total government debt as a proportion of GDP would rise above 100 percent next year and would reach 116 percent by 2034. The CBO estimates that while interest costs on government debt are at present roughly equal to military spending, they could rise to one and half times larger in a decade’s time.

Swagel noted that the expected rise in debt as a proportion of GDP would take it over the levels reached in World War II, and warned that even what seemed to be small changes in government spending could have major effects.

“We have the potential for some changes that seem modest—or maybe start off modest and then get more serious—to have outsized effects on interest rates, and therefore on the fiscal trajectory,” he said.

The rise and rise and rise of government debt had seen a rapid expansion of the US Treasury market where it is bought and sold. This market, the foundation of the US and global financial system has expanded to around $27 trillion, a 60 percent increase over the past five years. It is now six times larger than it was before the global financial crisis of 2008.

There has been a significant shift in operations of the market. In the past banks were major participants but their activity has been cut back, partly because of regulations introduced after the financial crisis—an example of how attempts to stabilise the system in one area can create problems in another.

Hedge funds have assumed a greater role. But their activity, particularly in the so-called basis trade in which they seek to make profit on the very small difference between the price of bonds and the price of their futures using large amounts of borrowed money, is creating concerns among regulators.

The growth of US debt, coupled with the instability in the financial system, is starting to raise questions about the role of the dollar as the global currency, the maintenance of which is an existential question for US hegemony.

The credit rating agency Fitch last year removed the triple A rating from the US citing concerns over a “high and growing general government debt burden.” Moody’s has maintained the triple A rating but has changed its outlook for the US from stable to negative.

The gold market is pointing in the same direction with the price of the metal, which, unlike fiat currencies, does embody real value in and of itself, has been steadily rising for the past 16 months and has been touching record highs. One of the reasons is increased buying by central banks after the freezing of Russian central bank assets at the start of the Ukraine war raised concerns that dollar assets held by any country could not be considered sacrosanct.

Swagel touched on the international role of the dollar in his FT interview, warning that its role as the global reserve currency, enabling it to run up large deficits, would not always insulate the US from market pressures if interest payments increased.

“We need to borrow from foreigners, because foreign capital helps keep interest rates low in the US,” he said. “But there’s two sides to it, in that cash flowing overseas [interest payments on debt] means us losing national income. On the other hand, not having the capital coming in for us to borrow—boy, that would be even worse.”

In a generally upbeat recent speech on trust and confidence in central banks, Agustin Carstens, the head of the Bank for International Settlements, the umbrella organisation of central banks, pointed to how fast a situation can change.

Periods of apparent tranquility, he said, are often when the seeds of future crises are sown and when financial markets smell weakness, they can move very fast. Carstens recalled the words of the late German economist Rudiger Dornbusch: “Financial crises take much, much longer to come than you think and then they happen much faster than you would have thought.”

He did not reference the US but under conditions where the growth of government is “unprecedented” and inherently unsustainable it may well have been a veiled warning.

No one can predict exactly how financial developments will unfold. But one thing can be said with certainty. As the experience of 2008‒2009 revealed, a crisis in the financial system will see an escalation in the assault on the working class to make it pay. And the intensity of that assault will be proportional to the size of debt mountain.

EU, IMF and regional powers bail out Egypt in return for services rendered to Israel’s genocidal war

Jean Shaoul

In the face of its worst economic crisis in 50-60 years and rising social tensions, Egypt has leveraged its position as Israel’s key accomplice in the Zionist regime’s genocidal war on Gaza to secure a series of bailouts from the International Monetary Fund, the European Union (EU) and Cairo’s Gulf allies.

Last weekend, European Commission President Ursula von der Leyen went to Cairo, along with leaders from Austria, Belgium, Cyprus, Greece and Italy, to sign a deal with the Butcher of Cairo, Abdel Fattah el-Sisi. Branded as an $8.1 billion “aid package,” its purpose is to help shore up the economy of the most important country in the Arab world, whose collapse would destabilise the region and precipitate mass migrant flows to Europe.

Egypt is home to around 10 million Middle East migrants, including 450,000 people who have fled the 11-month long civil war in neighbouring Sudan.

EU funding includes $5.45 billion of concessional loans and $2 billion of investment in renewable energy, trade and “security”—meaning support for Egypt’s armed security forces—over the next three years.

President Smt. Droupadi Murmu met President of the Arab Republic of Egypt, H. E. Mr. Abdel Fattah El-Sisi at Rashtrapati Bhavan (January 25, 2023) [Photo by MEAphotogallery / Flickr / CC BY-NC-ND 2.0]

Egypt’s economy, in decline for decades, was hard hit by the COVID-19 pandemic that sent tourism, a vital 15 percent of its economy, plummeting and led to the return of workers from the Gulf and the loss of their remittances, swelling the ranks of the unemployed. This was compounded by the outbreak of the US/NATO war against Russia in Ukraine pushing up the cost of agricultural imports, particularly wheat, maize and cooking oils. The two combined led to a $20 billion outflow of speculative capital—more than half of all the hot money invested in the country—seeking a higher rate of interest.

The war in Gaza led to a further decline in tourism and a catastrophic 50 percent fall in revenues from the Suez Canal as ships avoided the Red Sea route following attacks on commercial vessels linked to Israel and its US and UK backers by Yemen’s Houthi rebels. This has battered Egypt’s manufacturing, pharmaceutical and textile industries.

The war has also affected its energy market, with its re-exports of gas falling by more than 50 percent in the last quarter of 2023 compared with the same period in 2022.

Egypt’s economic problems have been exacerbated by el-Sisi’s vanity mega-projects, including an $8 billion widening of the Suez Canal, whose promised increased revenues failed to materialise; a $300 billion investment in new roads, ports and railways; a massive rearmament programme; and a $58 billion new administrative capital under construction since 2015—in the desert, 28 miles away from any renewed popular uprising in Cairo.

As a result, Egypt spends $32.79 billion, more than half of its budget, on debt servicing. The beneficiaries have been the military-linked companies that dominate Egypt’s economy and the army that now controls one quarter of the budget.

Unemployment, underemployment and anger over the lack of education and healthcare services is widespread. Around 30 percent of Egypt’s 108 million population live below the poverty line while another 30 percent are teetering on its edge. Egypt, once the pre-eminent power in the Middle East that even in the late 1960s was more prosperous than South Korea and Taiwan, has the sixth lowest GDP per capita in the region and the fourth lowest literacy rate.

El-Sisi maintains his rule with an iron fist far worse than that of longtime dictator Hosni Mubarak. Hundreds of political opponents have been killed in the last decade of his rule and 65,000 political detainees are incarcerated in Egypt’s jails, many without charge or trial, where they are subject to torture. Eight senior opposition leaders have recently been sentenced to death.

Independent media is censored, and international journalists have been subject to arrest, with Al Jazeera journalists detained for years without charges. All the Western media have withdrawn their reporters. All strikes and protests are brutally suppressed.

Amid concerns over Egypt’s “security”, the European powers have cast aside their hypocritical criticisms of his human rights abuses. They fear Israel’s planned ground offensive on Gaza’s southern city of Rafah on Egypt’s border, which could force hundreds of thousands of Palestinians to break into Egypt’s Sinai Peninsula, might be the straw that breaks the camel’s back.

El-Sisi’s regime is up to its neck in the genocide. It has sealed off Gaza’s southern border and is closely coordinating its actions with Netanyahu’s fascist regime in the blockade of aid deliveries and construction of a temporary holding pen for the Palestinians should they break through the border crossing. Its military is waging a brutal war against the population of the Sinai Peninsula under the guise of fighting “Islamist terror,” using similar methods to Israel against the Palestinians.

The EU deal follows the decision of Egypt’s Central Bank to raise interest rates by an unprecedented 6 percentage points and to float the pound, causing the currency to fall 60 percent and the cost of imported goods to rise. The government has agreed to privatise its state-owned enterprises and reduce its spending on infrastructure projects and social welfare. These measures are part of a package of “market reforms” made in return for a $5 billion IMF loan, in addition to the $3 billion agreed in December 2022. This additional loan comes despite the IMF withholding funds last year due to concerns about government abuse and mismanagement.

More money is on the way. On Monday, the IMF’s sister organisation, the World Bank, announced it will provide Egypt with more than $6 billion in financial assistance over the next three years “to help it meet its development goals.”

These loans follow Cairo’s sale last month of the development rights to the Ras el-Hekma coastal resort on the Mediterranean to the United Arab Emirates (UAE) for $35 billion, touted as Egypt’s largest ever deal, with an immediate down-payment from the UAE of $10 billion. Under the agreement, UAE sovereign wealth fund ADQ will develop the resort that will include hotels, entertainment projects, financial and business districts as well as an airport south of the city.

Saudi Arabia’s Public Investment Fund and the Qatar Investment Authority have been in talks to develop similar deals.

These deals with Egypt’s brutal dictator indicate the real nature of the discussions between the Biden administration in the US, Egypt and the Gulf states held under the cover of negotiations for a ceasefire and the release of the Israeli hostages held by Hamas in Gaza. At issue is how to prevent the collapse of the largest and most strategically important state in the Arab world as the Gaza war threatens regional stability.

Just weeks before the talks, Egypt’s sham presidential elections in December returned el-Sisi to power until 2030, with 90 percent of the vote against candidates from parties that are part of the regime. The US and leading European powers repeatedly expressed their support before the elections.

The military regime’s complicity in the genocide of the Palestinians is closely tied to its suppression of the working class in Egypt. El-Sisi’s toppling of Mohamed Morsi in July 2013 was not simply directed against the Muslim Brotherhood, but at the bloody suppression of the Egyptian working class, the most powerful in the region.

Millions of workers and young people had overthrown Mubarak in January 2011 after days of mass strikes and protests, shaking not just Egyptian capitalism but the entire region. While the el-Sisi military dictatorship has done everything in its power to drown the mass movement in blood, it is sitting on a social powder keg, as all the imperialist and regional powers are fully aware.

Thousands have protested Israel’s genocide in Gaza. In February, textile workers in Mahalla al Kubra, a historic centre of the class struggle in Egypt, went on a week-long strike for an increase in the minimum wage, forcing a concession from el-Sisi and signaling the growing opposition of the working class to his counter-revolutionary military dictatorship.