Notes from the front – of the week 27/5/2015

Stunning victory for Podemos

The local and regional elections held in the Spanish state were a victory for the anti-austerity political insurgents of Podemos and its allies and a defeat for the ruling Partido Popular (PP). This is an important breakthrough ahead of national elections to be held later this year and is a significant boost to the anti-austerity forces across Europe, especially Syriza in Greece.

The PP, which includes the political heirs of Franco, suffered a big setback and lost control of virtually every region or large municipality that it controlled. Its overall vote fell from 38 per cent to 27 per cent. The opposition socialists of PSOE who have adopted austerity policies also fell back by around 2 per cent to 25 per cent. For the first time since the restoration of democracy the combined vote for the two major parties is little more than half the vote.

The success of Podemos arises primarily from its anti-austerity stance. It grew out of the large youth-dominated Indignados movement and is little more than a year old. But other factors also boosted its success. It has a unifying approach with all forces who want to fight austerity so that many of its regional successes were in alliance with others. It also has a very good position on the outstanding national and democratic demands within the Spanish state, arguing than the Basques and Catalans do have the right to secede (although Podemos does not argue for secession).

These three factors – anti-austerity, an inclusive approach to all militant forces and the correct approach to the national question – came together spectacularly in Barcelona where Podemos ousted the dominant right nationalist Convergència i Unió which had postured in favour of Catalan independence on the reactionary grounds of protecting it from the poorer south. Anti-poverty and anti-eviction campaigner Ada Colau won the mayor’s race in Barcelona supported by Podemos and there is a possibility that Madrid, long a PP stronghold, will fall to a coalition including Podemos.

On the right there is a concerted effort to build up Cuidadanos, a rightist party which models its organisational forms on Podemos in order to shore up the right overall, but it has met with little success.

The victory has had an immediate impact. The Spanish government is pressing for a changed mandate at the ECB to focus on growth as well as inflation. It also wants increased EU integration and greater fiscal transfers to poorer countries and regions.

This reflects the pressure from the anti-austerity forces’ success in the elections. It will also be an important factor in Syriza’s continuing struggle with the institutions of the EU, ECB and IMF. The previous widespread austerity onslaught in Europe had to come to a halt when in 2011 it threatened to push Spain out of the Euro. Even the diehards at the ECB and EU Commission recognise Spain is too big to fail. The rise of Podemos will help Syriza in the battle with those forces.

Celebrate the marriage equality victory and extend it to the rest of Ireland

The Irish state’s vote for marriage equality on 22 May, with 62.07 per cent saying Yes, is an historic victory for LGBT equality. This is the first time ever that same-sex marriage has been endorsed (and resoundingly so) by a national popular vote, albeit in a divided nation.

There was a high turnout of 60.52 per cent, including many Irish citizens who live abroad travelling back to Ireland to vote.

Voters approved an amendment to the Irish state constitution stating: ‘Marriage may be contracted in accordance with law by two persons without distinction as to their sex.’

A crowd of several thousand celebrated the result on the main courtyard of Dublin Castle.

Sinn Féin played a leading role in this fight, arguing for marriage equality across the whole of Ireland; north and south, in the Dail, in the northern Assembly and in councils.

Across Western Europe, marriage equality has now been achieved in Belgium, Britain, Denmark, Finland, France, Iceland, Ireland, Netherlands, Norway, Portugal, Spain and Sweden.

The six counties in the north of Ireland are increasingly isolated in the north of Europe with their refusal to grant equality.

Attempts by Sinn Féin to introduce marriage equality in the north have been repeatedly blocked by the main unionist parties while the SDLP and Alliance have sat on the fence. The DUP and a majority of the UUP blocks all LGBT rights legislation, filing a ‘petition of concern’ to block marriage equality for a fourth time last month.

Sinn Féin’s Martin McGuinness has previously said: ‘This is a matter of whether or not we want to live in a modern progressive society that respects minorities, and as far as I’m concerned the LGBT community for far too long have been discriminated against and I believe that they are entitled to be treated as equals and treated with respect.’

Ireland’s unionists are the reactionary rearguard of a fight to sustain inequality. The DUP-controlled health ministry still bans gay men from giving blood.

LGBT activists in the north of Ireland plan to take to the streets over the coming weeks, stepping up the campaign for equality.

Crunch time approaching in Greece

There are the customary conflicting reports about whether Greece will be able to repay its next slug of debt, but it is clear that a crunch time is approaching. The next debt that falls due on 5 June is €306 million owed to the IMF as part of the first bailout of Greece’s creditors in 2010. But even if that payment is made a total of €2.027 billion is due to the IMF in June alone. As defaulting on ECB debt has fewer international ramifications this might be preferred, but the next ECB debt is not due until 20 July.

Syriza remains overwhelmingly popular because it is trying to carry out its mandate to stop austerity and remain in the Euro. Latest opinion polls put its support on 48 per cent, up 12 per cent from the election with every other party falling back. The coalition government’s support has risen from 64 per cent to 70 per cent.

Reports of major divisions on the Syriza central committee reflect the intense pressures from the entire ruling classes of Europe. The vote on the Left Platform proposals to renounce the debt, nationalise the banks, take measures to control bank deposits and in effect prepare to withdraw from the Euro was 75 in favour and 95 against.

Any unforced decision to withdraw would be a breach of the mandate, just as imposing austerity measures would. To hold its own support it must attempt to carry out both parts of its mandate. If a Euro exit comes it should only arise because the overwhelming bulk of the population understands membership is incompatible with halting austerity, and because of the actions of the Troika.

Yet it is also true that the risks are rising, and there should be preparations of a series of measures on preventing capital flight, obliging the oligarchs to pay taxes owed with assets seizures and protecting savers deposits in the banks, which are the key for future investment. The banks themselves would not be worth saving in the event of default as they are the big holders of Greek government debt. Measures such as the ones proposed would help shift the balance of forces in Syriza’s favour, both domestically and internationally.

But there are also important divisions among the Troika. US Treasury Secretary Lew has reiterated the US position that failure to reach an agreement risks disaster and is clearly more willing to compromise than the European institutions have been. They are very unlikely to snub US pressure entirely on this issue. At the same time, the rise of anti-austerity forces such as Podemos continues. This increases pressure on ruling circles, at least in the crisis countries to ease up on Greek austerity and more generally or risk being eclipsed.

Poland shifts right

The Polish presidential elections reveal an ongoing disintegration of the political centre in Europe. However, unlike in southern Europe the victory of Andrzej Duda signifies a further shift to the right in Polish politics.

Duda, representing the conservative-nationalist Law and Justice Party (PiS), won 51.55 per cent of the vote in the second round of elections, against the incumbent Bronisław Komorowski from the centre-right Citizens’ Platform (PO) who gained 48.45 per cent. This was a significant defeat for Komorowski, as he had previously been well ahead in the opinion polls and had been expected to win easily in the first round. However, his lacklustre campaign and a growing feeling of dissatisfaction with the ruling PO government, allowed Duda to score a surprise victory.

The Polish economy has continued to grow in the wake of the global economic crisis, as the huge inflow of EU funds has enabled the government to increase public investment. However, despite this economic growth, salaries remain amongst the lowest in Europe, there continue to be large social inequalities and poverty in the country; over a quarter of the workforce are employed on insecure contracts and public services are underfunded and deteriorating. Since the country joined the EU a decade ago, over two million people have left the country and there is a growing feeling that the gains of the country’s economic growth have been unfairly distributed.

Duda was able to capitalise on this dissatisfaction by focussing on people’s standards of living. He promised such things as lowering the retirement age, increasing some social benefits, protecting those holding mortgages in Swiss Francs and investing in Polish industry. These were largely populist slogans as the President has little power to influence economic policy and he also combined them with promises of tax cuts.

Duda was helped by the rise of the populist politician Paweł Kukiz, who won around 20 per cent of the vote in the first round of elections. The former rock-star ran a campaign aimed against the political elite, promising to introduce a first-past-the-post electoral system. Despite the absence of any clear economic or political programme, he won the support of many who wished to register their dissatisfaction with the current system.

The victory of Duda opens up the possibility of PiS defeating PO at the parliamentary elections due in November this year. PO is essentially a conservative party and it has aligned with the US on many foreign policy issues such as the crisis in Ukraine. However, PiS are even further to the right on these issues and are a party closely aligned to the Catholic Church. The President has some power to influence foreign and defence policy and it is to be expected that he will adopt a more hostile approach to Russia; align closer with the Ukrainian government and perhaps break from the more conciliatory approach currently being pursued by Germany and France.

Polish politics have been dominated by PO and PiS for over a decade. There are now signs that this dominance is weakening and that people are looking for an alternative to these two parties. Nevertheless, the left are poorly placed to take advantage of this situation, with the centre-left Democratic Left Alliance’s (SLD) candidate winning just 2.4 per cent of the vote in the first round of elections. With the SLD in disarray some new alternative left projects are emerging, although none of them as yet seem capable of mounting a serious challenge at the forthcoming parliamentary elections. This opens up the possibility of a new more aggressive right wing coalition government being formed this autumn.

A turn in the situation in Afghanistan?

Last week the intelligence agencies in Afghanistan (National Security Directorate) and Pakistan (Inter-Service Intelligence) announced a Memorandum of Understanding, entailing an agreement to allow the two agencies ‘to share information and jointly fight terrorism in the region’. This is a significant change of policy by Afghan President Ghani, as relations between the two countries were completely hostile during the time of former President Karzai, who had favourable relations with India.

The new orientation has been opposed by Chief Executive and Ghani’s deputy, Dr Abdullah Abdullah, as well as by Karzai. It certainly represents a break with Karzai’s reliance upon former Northern Alliance forces as the basis of national policy in Afghanistan. There also appears to be a rift inside the Afghan parliament on the issue.

The agreement has been aided by the intervention of the Chinese government in promoting a trilateral rapport between Afghanistan, China and Pakistan. This can been seen as complimentary to the economic agreement between China and Pakistan to establish the China-Pakistan Economic Corridor, whereby China has committed to development projects inside Pakistan worth $33.8 billion in energy, and $11.8 billion in infrastructure.

The intelligence initiative also offers the promise of a more credible peace process inside Afghanistan. The Pakistan government, and the Inter-Service Intelligence, have long been seen to be in dialogue with the Taliban. US government-supported efforts to encourage the Taliban to have talks via the mediation of Qatar have been entirely unsuccessful to date.

The continued engagement of NATO forces in Afghanistan remains an obstacle to peace. General Campbell, commander of ISAF, recently called for the establishment of a permanent NATO base in Kabul, with US troops present. President Obama recently overturned his pledge to halve the US troop compliment in 2015. This means 9,800 US troops will remain as part of the 13,200 ISAF occupation force.

Behind this delay are major concerns about the viability of the Afghanistan National Security Forces (ANSF), the national army and militarised police. These forces have been built up as the heart of NATO strategy, a total compliment of 320,000 armed personnel. Yet early in the new round of fighting they have been shaken by the Taliban offensive in Kunduz, and up to 11 other provinces. Afghan National Army Chief of Staff, General Karimi, said ‘Afghan security forces do not have the ability to carry out operations in many provinces simultaneously’.

Indeed this vulnerability has led to the extraordinary decision of the Afghan government to start paying for local armed militias, and local warlords. This is in flat contradiction to the promotion of the ANSF, and the demobilisation of such militias in recent years. But the military position is precarious – between January and April 2015, 1,800 soldiers and police officers were killed, and 3,400 injured. This represents a 65% increase on the same period in 2014.

It would seem that a turn is developing in the situation in Afghanistan. On offer appears to be a choice between a new form of engagement with the Taliban, or a serious slide towards military chaos.

Economic weakness and instability caused by US

Janet Yellen, the chair of the US Federal Reserve Bank, is warning that rates could rise this year despite the clear weakening of the US economy. Even this declaration has created new instability in the world economy with the US Dollar appreciating and commodity prices falling once more. If rate rises do eventually come the turmoil is likely to be even greater.

The US is in chronic need of overseas capital to finance expansion. It cannot direct domestic capital towards investment without producing a sharp fall in living standards and therefore requires inflows of capital, the savings of the rest of the rest of the world. This is the aim of Yellen’s talking up the US economy and the prospect of rate rises, making the US dollar more attractive to hot money inflows.

Yet this comes at a time when evidence of US slowdown is mounting. The Atlanta Fed’s ‘GDPNow’ forecast model projects just 0.5 per cent annualised growth in the first half of 2015. New orders for durable goods, everything from aircraft to cars have fallen by 1.3 per cent in the first four months of 2015 compared to the same period in 2014. Industrial production has fallen five months in a row. Crucially, corporate profits fell in the final quarter of 2014 and there is no sign of a rebound in the beginning of this year. A sustainable recovery can only be profits-driven.

The US economy could not absorb significant interest rate rises without severe dislocation. But Yellen’s threat is already having a renewed negative impact on the rest of the world. In particular, producers of basic commodities are hit by a renewed fall in the prices of their key exports. Living standards in many Latin American, African and Asian economies will suffer as a result of US structural weakness combined with its global dominance.