Tuesday, 29 July 2008


Oil corporation’s profits and crony capitalism provoke mass protest

Last Friday, March 10, nearly 2,000 people protested in Kuala Lumpur to voice their resentment over the big fuel price increases put through by the government of Abdullah Badawi. Petrol, diesel and liquefied petroleum gas have all gone up by nearly 25%. This was the second public demonstration since the government raised fuel retail prices on March 2 in a move to cut its fuel subsidy bill by about US$1.18 billion. Although the protest was peaceful, the Malaysian police used violence to disrupt it by unleashing chemically-laced water cannons on some of the crowd.

In fact, Kuala Lumpur has not seen such large anti-government demonstrations since Abdullah took power in 2003. He had sought to heal the wounds of the late 1990s when financial and political crises provoked major street protests. This recent development also shows how the attempted ‘humble and pious’ outlook of the Abdullah government, in comparison to the 22 years of Mahathir autocratic rule, could be tainted and dented by the greed for profit of the big corporations such as Petronas - Malaysia’s national petroleum corporation.

Although Petronas is a state-run corporation, since Mahathir’s era in the 1980s it has given immense authority and autonomy to its corporate managers and directors to exploit the market forces and government influences in order to develop its resources and profits. In addition to the growing pace of oil exploration activities at home, Petronas has its exploration and international business operations in oil resource-rich countries elsewhere such as Sudan, Myanmar, Turkmenistan, Nigeria, Chad, Egypt and the Malaysia-Thailand Joint Development Area. This means cooperating with a number of despotic regimes. It currently manages 59 energy ventures in 26 different countries around the world. Now Petronas, the only Malaysian company in the ‘Fortune 500’, like many other multinational energy companies, is riding the crest of the towering global fuel prices and raking in unprecedented revenues and profits. For the fiscal year ending in March 2005, it recorded a pre-tax profit of US$15 billion - up 55% on the previous year. It contributes up to 30% of the Malaysian government’s total revenues.

The role of Malaysian state capitalism, especially in the case of Petronas, has clearly illustrated the function of the state in developing the national capitalist corporations in Malaysia and how its revenues and profits are being used to benefit the crony capitalists. Abdullah recently said, “Petronas has been very responsible. They have made a huge contribution towards the development of the country”. But during the Mahathir era, Petronas’ profits were repeatedly used to fund massive and extraordinary projects. These included the construction of the luxury, high-class administrative capital at Putrajaya, the sponsorship of a Formula One motor-racing team and the company’s spectacular twin-tower building in Kuala Lumpur, which is the tallest skyscraper in the world.

Double standards

Petronas’ profits have also been used to finance economically unsustainable ventures or to bail out politically connected firms in order to benefit certain cronies. For instance, in 1998 Petronas, through its shipping carrier Malaysian International Shipping Corporation Berhad (MISC Ltd.), without any explanation acquired a debt-laden shipping company, Konsortium Perkapalan Bhd (KPB Ltd.). Meanwhile, some government critics have speculated that the recent subsidy savings would be used to prop up Malaysia Airlines (MAS), the Malaysia's ailing national carrier.

The government justified the necessity to cut its fuel subsidy by about $1.18 billion to curb over-consumption, to discourage smuggling and to remove subsidy-generated market distortions. But the government never questioned Petronas’ generous billions in subsidies for Independent Power Producers (IPP) and Tenaga National Bhd (the national power corporation). These subsidies ensured that their ventures into the power industry have been largely profitable. Last year, the business magazine - ‘The Edge’ - identified the IPP beneficiaries as Genting Sanyen Power, YTL Power, Malakoff Bhd and Tanjong Plc/Powertek Bhd. It said, “These companies are controlled by the families of Lim Goh Tong, Yeoh Tiong Lay, Syed Mokhtar Al-Bukhary and Ananda Krishnan, four of the richest families and individuals in the country”.

Undoubtedly, the fuel hike - the biggest in Malaysian history - will further ratchet up inflation and especially burden working class families. The recent demonstrations established that public anger has focused on Petronas’ massive profits and its extravagance. More importantly, it has focused on how those massive profits are used and potentially abused by unscrupulous business-favouring politicians and the state. Meanwhile the essential needs of working people are being slaughtered such as a minimum or living wage, decent housing, accessible public facilities for all (transportation, recreation, education, health), a secure environment, basic public utilities (water, electricity, sewerage system). The fallacious rhetoric of the government is that, “They (Petronas) have made a huge contribution towards the development of the country”.

Ironically, Petronas, especially during every major festival celebration, has been highlighting in its TV commercials the essential need for harmony and tolerance in Malaysia’s multicultural society and the need for a friendly environment. In reality they are the most dangerous anti-social elements in society trampling on the fundamental rights and needs of the majority of the population in the interest of profits. This devious and deceitful character of Petronas is being enhanced by a few at the top of corporate management who are carrying through profit-orientated policies with the full approval of the government oligarchy. This is how the Malaysian capitalist economy works - for the profits of a few, rather than the benefits and needs of the majority.

In order for the billions in profits going to corporations like Petronas to benefit the majority - the working class and their dependents as well as other oppressed people - for their basic day-to-day routines and living, they must be taken into public ownership, under democratic working class control and management. The majority - the working class in Malaysia - has the leading progressive role to play together with all those exploited by capitalism, in order to end the rule of profit and establish a socialist plan of production for a socialist society to meet the needs of all.

15 MARCH 2006

Monday, 21 July 2008


THE WORLD faces the horrifying prospect of major climate change with its potential for catastrophic impact on food production and living conditions across the world.

Yet, the political leaders of the major capitalist economies failed to agree on any meaningful action on this question at the recent G8 meeting in Japan.

Instead they issued a vague commitment to 50% cuts in global carbon dioxide (CO2) emissions by 2050. Well that's something, you might say, but even this pledge is flawed. Firstly, there is no stated base year for the 50% cut.

Secondly, only the G8 countries have agreed to this latest proposal and they haven't said how it is to be shared between developing and developed nations. Mexico, Brazil, China, India and South Africa have demanded that the G8 cut their own greenhouse gas emissions by more than 80%, accusing them of not taking account of the needs of growing economies.

The US is to convene a meeting including these countries and other major CO2 emitters but a draft statement doesn't mention quantified targets, only that "deep cuts in global emissions will be necessary".

However, the major capitalist countries can't even agree modest reductions amongst themselves - they want to protect their own national interests and not concede any economic advantage to their rivals. The EU countries already accuse Canada and Japan of fudging the targets as their emissions have risen considerably since the 1990s.

What is more, no interim targets have been announced. According to the Intergovernmental Panel on Climate Change's 2007 report, global emissions are supposed to peak and start reducing by 2015 to avoid runaway global warming, but this wasn't even mentioned.

The House of Commons environmental audit committee has backed scientific advice that there have to be 80-95% cuts in CO2 emissions by 2050. Friends of the Earth said: "Setting a vague target for 42 years' time is utterly ineffectual in the face of the global catastrophe we all face".

In reality big business and the multi-national corporations are calling the shots. For them profit is the bottom line - Shell have already abandoned the majority of their alternative technology development projects because they are raking in record profits from the high price of oil.

The president of the European Commission calls the G8 announcement "a strong signal to citizens around the world" and "a new shared vision". But their vision is shared with big business - it's about how to maintain their profits and the future is for someone else to worry about.

However, for most people on the planet, for the billions of ordinary workers, poor farmers and unemployed - many of whom already suffer the effects of global warming - this isn't enough. To solve these problems, we need to begin building a socialist alternative to the big business policies associated with the G8. We need to change the system, not the climate.

16 JULY 2008

Sunday, 20 July 2008




Perdana Menteri Abdullah Badawi kata, krisis makanan dan krisis minyak masalah global…kerajaan Malaysia tidak dapat buat apa-apa...walaupun Malaysia mempunyai sumber petroleumnya sendiri...harga minyak melambung tinggi!!!...Ketua-ketua negara jiran kita seperti Thailand dan Indonesia pun kata, kuasa mengawal krisis ini bukan di tangan mereka ….walaupun Thailand merupakan pengeluar dan pengeksport beras terbesar di dunia…tetapi harga beras dinaikkan di pasaran antarabangsa oleh kapitalis/pemodal kaya-raya dan bukannya petani-petani miskin di Thailand!!! …Malahan Presiden Amerika, George Bush pun kata negaranya tidak dapat mengawal krisis ini…walaupun Amerika merupakan kuasa ekonomi dan politik yang paling berkuasa di dunia!!!

Nampaknya, memang betul seperti kata ketua-ketua negara-negara tersebut, sememangnya ini krisis global yang menyelebungi setiap pelusuk di dunia ini. Tetapi peliknya, mereka ini jugalah sentiasa menyokong dan mempelopori sistem yang penuh dengan krisis ini.

Kalau kita menjengkuk ke belakang…masa krisis ekonomi 1997 dan krisis-krisis sebelumnya pun ketua-ketua negara ini menggunakan penjelasan yang sama. Tetapi persolannya berapa lama mereka nak ulang penjelasan yang sama dan apa penyelesaianya untuk kita? Warga pekerja dan rakyat biasa dah jemu dengan retorik-retorik yang tidak bertanggungjawap ini.


Tetapi satu perkara yang sangat ketara ialah mangsa-mangsa krisis-krisis ini yang tidak dapat dikawal oleh kerajaan-kerajaan ini, masih golongan yang sama. Di Amerika ribuan golongan pekerja telah kehilangan rumah kediaman dan pekerjaan disebabkan krisis ekonomi bersama krisis minyak dan makanan yang melanda negara tersebut. Di Malaysia harga barangan dan keperluan asas melambung tinggi membebankan warga pekerja dan rakyat biasa…Sememangnya golongan warga pekerja dan keluarga mereka dan bukannya pemodal-pemodal dan ahli-ahli politik yang kaya raya yang menjadi mangsa kesengsaraan ini …malahan golongan kelas pertengahan (middle class) juga terjunam ke dalam kancah krisis ini.

Tetapi persoalannya, mengapa kerajaan-kerajaan yang dipilih oleh majoriti rakyat ini terlalu lemah untuk mengawal krisis ini untuk kepentingan umat manusia sejagat… Kita pilih kerajaan dengan harapan supaya kerajaan tersebut : OLEH RAKYAT UNTUK RAKYAT KEPADA RAKYAT, tetapi harapan kita berkecai apabila sifat kerajaan-kerajaan ini adalah : OLEH RAKYAT tetapi UNTUK DAN KEPADA GOLONGAN KAYA RAYA DAN AHLI POLITIK. Kerajaan menyarankan supaya golongan majoriti iaitu warga pekerja dan rakyat biasa untuk tukar stail kehidupan untuk mengharungi krisis ini.

Tetapi anehnya, mengapa kerajaan tidak menyarankan perkara yang sama kepada segelintir billionaire dan millionaire seperti Robert Kuok, Ananda Krishnan, Syed Mokhtar Albukhary dan lain-lain yang mempunyai berbillion-billion ringgit. Kalau kita lihat rasionalnya, dengan memberikan sebahagian kekayaan mereka untuk menyelesaikan krisis ini tidak sama sekali akan memiskinkan mereka.


Nampaknya ada suatu 'tangan' yang lebih berkuasa dan power daripada kerajaan-kerajaan ini. 'Tangan' yang dimaksudkan ini adalah bukan 'Tangan Tuhan' seperti kata Maradona…tetapi 'Tangan Kapitalis' yang sentiasa mengkongkong kerajaan-kerajaan ini supaya menuruti kerakusan untuk keuntungan.

Sumber kekayaan dan keuntungan di dunia ini dikawal oleh hanya 500 syarikat-syarikat kapitalis gergasi seperti Exxon-Mobil, Samsung, Microsof dan lain-lain. Mereka ini akan bersaing di antara satu sama lain bukannnya untuk mengatasi masalah-masalah dunia seperti kemiskinan, kebuluran dan sebagainya, tetapi untuk memperkasakan kuasa mereka dalam ekonomi/politik dunia dan untuk menjanakan lebih keuntungan.

Syarikat Petronas yang dimiliknegarakan oleh kerajaan Malaysia adalah salah satunya. Syarikat-syarikat inilah yang menentukan keadaaan ekonomi dan politik di sesuatu negara dan dunia. Dengan perkataan lain, kerajaan-kerajaan di dunia ini adalah di bawah telunjuk golongan kapitalis Multinasional dan nasional ini. Kerajaan-kerajaan pro-kapitalis ini hanyalah untuk memenuhi kehendak golongan kapitalis ini dengan menganaktirikan golongan majoriti pekerja dan rakyat biasa.


Matlamat golongan kapitalis atau pemodal ini adalah hanya untuk menjanakan keuntungan dengan memerah tenaga buruh warga pekerja. Dengan perkataan lain, warga pekerja menjanakan keuntungan tetapi golongan kapitalis yang mengawal bagaimana keuntungan itu digunakan. Warga pekerja bertungkus lumus berkerja untuk sesuatu syarikat untuk mengecapi suatu kehidupan yang sederhana untuk memenuhi keperluan asas anak-anak dan keluarga. Tetapi, kerakusan golongan kapitalis untuk mengaut keuntungan berlipat ganda tidak mempedulikan keperluan asas golongan warga pekerja dan rakyat biasa.

Malahan mereka sanggup memperjudikan komoditi keperluan asas umat manusia seperti beras, petrol, tepung dan sebagainya di dalam pasaran saham dengan membuat spekulasi dengan matlamat untuk mengaut keuntungan berlipatganda. Ini adalah mantra sistem kapitalis yang mencengkami kehidupan kita.


Begitulah juga realitinya dengan syarikat Petronas. Walaupun Petronas adalah sebuah syarikat milik negara tetapi kerajaan Malaysia membina syarikat ini dengan matlamat membuat keuntungan berlipatganda dengan bersaing di pasaran antarabangsa untuk menmanfaatkan kroni-kroni dan kapitalis tempatan. Dan jelas iannya bukannya untuk memenuhi keperluan golongan majoriti warga pekerja dan rakyat biasa di negara ini. Sebab itulah Petronas ikut harga minyak di pasararan dunia dan lebih mementingkan untuk menggunakan keuntungannya untuk aktiviti-aktiviti untuk melipatgandakan lebih keuntungan lagi.

Ini jelas menunjukkan pentingnya syarikat-syarikat seperti Petronas dimiliknegarakan tetapi pada masa yang sama mestilah di bawah kawalan dan pengurusan secara demokratik oleh warga pekerja untuk memenuhi keperluan rakyat biasa.


Ini jelas menunjukkan sistem kapitalis yang bersifat anarki (tiada kawalan yang teratur hingga menyebabkan ia dipenuhi dengan berbagai krisis) yang sentiasa mencengkam majoriti golongan pekerja dan rakyat biasa sedang menghadapi krisis yang tenat. Tetapi setiap kali sistem ini dalam krisis, golongan majoriti iaitu warga pekerja dan rakyat biasalah yang menanggung beban krisis tersebut dan menjadi mangsannya.

Kerajaan-kerajaan Pakatan di negeri Selangor, Penang, Perak dan lain-lain telah membawa sedikit perubahan yang telah dialu-alukan oleh rakyat biasa. Tetapi untuk isu-isu penting seperti gaji berdasarkan inflasi, harga makanan, kemudahan-kemudahan asas (kesihatan, pendidikan), harga minyak, mereka tiada penyelesaian yang jelas melainkan menyalahkan polisi-polisi kerajajaan BN. Manakala golongan kapitalis di negeri-negeri terus menerus mengondol keuntungan berlipatganda. Negeri-negeri ini juga akan mengalami masalah yang sama yang sedang dihadapi oleh kerajaan BN jika polisi-polisi seperti memiliknegarakan sumber-sumber alam dan keperluan-keprluan asas di bawah kawalan warga pekerja secara demokratik tidak diambil segera. Misalnya, walaupun kerajaan Selangor memberikan air percuma, tetapi SYABAS (Syarikat Bekalan Air Selangor) yang bermotifkan keuntungan akan meningkatkan tariff berdasarkan kepada kenaikan kos minyak dan sebagainya. Ini adalah sama seperti apa yang dihadapi oleh kerajaan BN dengan PETRONAS. Manakala kerajaan Pakatan Kedah pula beria-ia untuk menggunakan sumber alamsemulajadi untuk membuat keuntungan walaupun mendapat tentangan daripada kebanyakan rakyat dan badan-badan alam persekitaran. Kerajaan-kerajaan negeri ini juga masih dikongkong oleh kapitalis dan kroni-kroninya.

Persoalannya penting sekarang adatak sebarang alternatif untuk merubah keadaaan ini di negara dan dunia ini. Seperti yang dibincangkan di atas, sistem kapitalis adalah suatu sistem yang menitikberatkan golongan kapitalis atau pemodal. Golongan ini adalah golongan minoriti yang mementingkan kuasa dan keuntungan . Manakala warga pekerja dan rakyat biasa yang merupakan golongan majoriti mahukan keperluan-keperluan asas mereka dipenuhi.


Sistem Kapitalis tidak berupaya untuk membekalkan keperluan-keperluan asas seperti minyak, makanan dan lain-lain untuk memenuhi keperluan masyarakat secara keseluruhannnya. Mereka tidak akan mengambil initiatif secara serious untuk memelihara sumber-sumber alam, melindungi persekitaran dan mengambil langkah-langkah untuk mengatasi perubahan cuaca dunia (global warming) dan seterusnya menyediakan sumber alternatif kepada umat manusia.

Justeru itu, warga pekerja dan rakyat biasa yang merupakan golongan majoriti mempunyai peranan penting sebagai agen perubahaan kepada krisis-krisis yang sedang berlaku di negara dan dunia ini. Mereka yang menjanakan kekayaan negara ini melalui tenaga buruh mereka. Maka golongan majoriti ini jugalah seharusnya mengawal dan menguruskan bagaimana sumber-sumber keperluan manusia ini dibanggunkan dan diagihkan secara demokrasi.


Justeru itu adalah amat penting untuk warga pekerja untuk membina satu pertubuhan atau parti pekerja yang bebas untuk memperjuangkan harapan dan hasrat majoriti warga pekerja dan rakyat biasa.


Harga minyak dan makanan yang melambung tinggi merupakan satu bencana kepada warga pekerja di setiap pelusuk dunia. Keadaaan kacau-bilau tanpa tentu arah sistem kapitalis memerlukan kita menukar sistem ini. Di antara pendekatan sosialis berdasarkan kepada :

Miliknegarakan syarikat-syarikat minyak, gas dan makanan dengan pampasan yang minimum berdasarkan bukti yang rasional. Uruskan industri tenaga dan makanan ini sebagai badan awam berdasarkan kepada kawalan dan pengurusan secara demokratik oleh warga pekerja

Rancangkan pembangunan dan pengagihan sumber tenaga dan makanan ini untuk memenuhi keperluan nyata ekonomi dan untuk keperluan warga pekerja/rakyat biasa

Miliknegarakan semula keperluan-keperluan asas untuk golongan majoriti iaitu warga pekerja dan rakyat biasa seperti tenaga elektrik, gas , air dan lain-lain yang sedang didominasikan oleh syarikat-syarikat besar untuk motif keuntungan semata-mata

Meminta gerakan-gerakan pekerja di negara jiran dan antarabangsa yang lain untuk memperjuangkan untuk program yang sama dengan tujuan untuk membangunkan perancangan teratur sumber tenaga dan makanan antarabangsa

Peruntukkan sumber-sumber yang diperlukan untuk penyelidikan untuk sumber-sumber tenaga dan makanan alternatif yang selamat dan efisen.


20 JUN 2008


‘Political tsunami’ creates new political landscape

The twelfth general election in Malaysia’s history, concluded on 8th March, has changed the political landscape of Malaysia. For the 50 years since independence the country has effectively been a one-party state, thoroughly dominated by the BN (National Front) communal coalition governments. Many have called the election a ‘political tsunami’. The huge wave of widespread discontent against the BN government in peninsular Malaysia (excluding East Malaysia -Sabah and Sarawak) has led to the biggest setback for BN ever in its history.

Historic victory for the opposition

The BN won just 50.6% of the overall popular votes, but in peninsular Malaysia, it actually, though narrowly, lost the popular vote. There was around a 70% turnout for up to 11 million registered voters. For the first time since 1969, the BN lost its iron-clad 2/3 majority in parliament by winning only 140 out of 222 seats in parliament. Although it still holds a 63% majority, this is the lowest ever by Malaysian standards. This, however, would prevent the BN from amending the constitution or enacting important laws in parliament freely at will.

On the other hand, the oppositions parties which comprise the PKR (People’s Justice Party), the DAP (Democratic Action Party) and PAS (Islamic Party of Malaysia) won 82 seats in parliament compared to 20 seats in the 2004 election. Furthermore the BN also lost control of four states - Penang, Selangor, Perak and Kedah - that have been strongholds for it in the past. Penang and Selangor are the wealthiest states where powerful multinational companies such as Dell, Intel and Motorola and the biggest commercial and financial entities are operating. Together with Kelantan, which was the only state in opposition hands before the elections, the opposition parties now control five out of thirteen states, which is unprecedented. The opposition also made significant breakthroughs in other states such as Negeri Sembilan, Johor and Melaka which were considered BN bedrocks. The opposition also captured Kuala Lumpur, the capital of Malaysia, winning 10 of its 11 seats in parliament.

Even though, the elections have not totally broken the mould of Malaysian politics as it has existed since independence, the scale of the setback for the BN coalition of race-based parties raises prospects for the country to shift away from race-based coalition politics practiced by the BN, involving UMNO (United Malays National Organization) for Malays, MCA (Malaysian Chinese Association) for Chinese, and MIC (Malaysian Indian Congress) for Indians. The BN has provided stability for a free-market economy but become little more than a stooge for foreign and national capitalists that has failed to respond adequately to the fundamental needs of the majority in society.

Growing popular discontent

The 1999 election, which took place after the massive ‘reformasi’ movement, had given the biggest hope ever to replace the BN government or to deny the 2/3 majority held since 1969. The power struggle in UMNO between Mahathir and Anwar (then the Deputy Prime Minister) which led to the imprisonment of Anwar, triggered the massive movement mainly participated in by Malay youths and students. The issue revolved around injustices meted out by Mahathir on Anwar and the autocratic nature of Mahathir’s regime and his government apparatus, especially the police and the judiciary. However, the ‘reformasi’ movement had not attracted the Indians and Chinese much, as they saw the ‘reformasi’ movement as a crisis of leadership in the Malay population. With Mahathir’s success in pulling the country out of devastating economic turmoil of 1997, the BN government won a 2/3 majority comfortably, mainly through Indian and Chinese votes, though the majority of Malay votes swung to the opposition.

All this time, the BN government has utilised the mixed racial composition and racial sentiments to its advantage to win elections, especially in most of the constituencies which are racially mixed. If UMNO was in crisis and lost the support of Malays as happened in 1999, they would exploit the MIC and MCA by stirring up racial sentiments to maintain the support of Indians and Chinese to achieve a majority and vice versa, if the MIC or MCA were in crisis.

Abdullah replaced Mahathir

When Abdullah Badawi came to power in 2003, after 23 years of the autocratic regime of Mahathir, he vowed to eliminate rampant corruption, the patronage system and misuse of power that had been institutionalised by the Mahathir regime. He also promised to streamline the functioning of the government to fulfill the fundamental needs of the people. As a personal vote of confidence in him and an endorsement of his vision of Malaysia’s future, the people overwhelmingly gave him a strong mandate in the 2004 general election. The BN gained more than 90% of the seats in parliament, which was unprecedented.

However, since the election, corruption and mismanagement of funds became more widespread in every part of the government apparatus from the police to the judiciary. Abdullah was weak in confronting the national capitalists and the UMNO political elites who have been enriching themselves by maintaining the status-quo. This enraged ordinary people who were seeing the government as taking the people’s trust of them for granted. The anger over the government turned greater when the government failed to control the fuel prices and inflation generally as well as escalating crime in urban residential areas. Despite that, the racial bias of the BN, led by UMNO, against non-Malays created further dissatisfaction among Chinese and Indians.

These frustrations of the Malaysian working class as well as middle class were strongly expressed in two big rallies last November. The first was led by BERSIH (a coalition for electoral reform) that attracted more than 40,000 dissidents. Most were Malay working and middle class who were supposedly there to express dissatisfaction against vote-rigging. But it was used by the majority to express their resentment over government policies that increased living costs and crime rates.

The second demonstration was led by HINDRAF (a coalition of Indian NGOs and professionals) that attracted around 30,000 people, mostly Indian working class youths, to express the marginalisation of Indians in education, employment, religious practice and other things. The anger of Indians was further infuriated by the arrest of five HINDRAF leaders under the Internal Security Act (ISA), that could confine them without trial for two years. Meanwhile most of the Chinese, who are middle class as well as small or medium business people, though passive in expressing their feelings openly, were dissatisfied with government pro-Malay policies as well as its racial bigotry.

Government’s economic policy

The BN government, with its manifesto ‘Security, Peace and Prosperity’, had also failed to convince the people in the key area that has been the backbone of its legitimacy - economic performance. The government claimed that the economy is growing at around 6%, has nearly full employment, more than US$100 billion in foreign exchange reserves and a record US$13.7 billion in foreign investment, but inequality is rising sharply and increasing inflation is the highest since the early 1970s. As a result of that, the ordinary people - notably the working and middle class in the urban and suburban areas - are feeling the pinch. The erosion of the BN electoral base in rural constituencies shows that, even though high commodity prices for rubber and palm oil have brought wealth to the rural areas, it is not keeping up with rising costs. The recent holidays of Hari Raya, the Chinese New Year and Deepavali were noticeably less lavishly celebrated by people than before - a real sign of economic difficulties. Wages have dropped relatively and those working in the manufacturing and service sector make barely enough to survive. Unemployment among younger people also remains very high.

Contrary to previous elections, this year’s one has managed to unify different races in significant numbers, over common issues that have affected everybody and on the need for change. All these grievances, as well as the rampant corruption and mismanagement in the BN government, set the political tone for the opposition parties for the twelfth general election.

Opposition’s multiracial appeal – reforms and the welfare state

The BA (Alternative Front) was formed to contest the 1999 elections to confront BN hegemony. Initially the BA was comprised of the PKR, DAP and PAS. The DAP, which insists that Malaysia should remain a secular state, left the coalition after the 1999 general election because of its intolerance with the PAS position of an Islamic State. The three parties have different perspectives and approach in Malaysian politics, but all three support free market capitalism.

The left-of-centre DAP with its slogan ‘Malaysia for Malaysians’ considers itself as a multiracial party, but since its emergence it has been dominated by Chinese. It has been seen suspiciously by Malays mainly because it focuses on Chinese majority constituencies. PAS, since 1990, has ruled Kelantan, the Malay majority state which is relatively backward with rural agriculture as the main economic activity. Although PAS portrayed that non-Muslims are treated fairly in the state, its conservative measures, such as banning unisex barbers and introducing single-sex tills in supermarkets in Kelantan, displease the non-Muslims as well as secular Malays. However PAS, which has been identified with Islamic state and Hudud laws, has toned down its conservative approach in order to woo the support of Indians and Chinese. Nevertheless, the PAS policies that are based on Islamic teachings are still being seen by non-Muslims as a threat to their religious freedom. The PKR, a multi-ethnic liberal reform party, emerged from the ‘reformasi’ movement and has tried to move towards a multiracial party. Though in the initial stages it only managed to attract disgruntled UMNO members to its fold, in the latter period more non-Malay middle class and professionals joined the party.

Since his release from prison in 2004, Anwar Ibrahim has vowed to strengthen the PKR, which won only one parliamentary seat in the 2004 election, and to establish formidable opposition coalitions to counter the BN. Since then he has been seen as the opposition’s leader and has been engaging with DAP and PAS to outline common strategies for opposition. They also managed to reach an agreement to avoid any election contest among them and went for 1 to 1 contests with the BN.

The opposition parties which have all this while been identified either as racial or religious parties, have been alerted to people’s desire for change, especially after the BERSIH and HINDRAF rallies at the end of last year, to woo multiracial support to gain more seats. Strong anti-government feelings have developed since last year, with many people seeing the BN government as powerless in controlling the price hikes, arrogant, disrespectful, dishonouring the people’s mandate and corrupt. The opposition has capitalised on these general feelings for change with a reform and populist agenda as the alternative. The PKR, DAP and PAS formulated their respective manifestos - ‘New Dawn for Malaysia’, ‘Malaysia Can Do Better: Just Change It!’ and ‘Welfare State and Fair, Clean and Honest Government’ - to address people’s grievances and to present them with alternative solutions.

The reformist ideas advocated by Anwar re-emerged again in this election after they had been lost following the failure of the ‘reformasi’ movement in 1998 to overthrow the Mahathir regime. The PKR claims that the fuel price can be lowered and minimum wages can be fixed at 1,500 Malaysian ringgits. PAS put forward the idea of the ‘Welfare State’, instead of the ‘Islamic State’ it had advocated in previous elections, to garner support from Indian and Chinese voters as well as secular Malays. It proposes a free education and free health system, among other things. The DAP vowed to re-introduce council elections which had been abolished by the BN in the 1960s.

The opposition parties also campaigned on a platform of affirmative action for all in need, not for a particular ethnic group. In the past this would have been deemed electoral suicide. With the growing wealth gap between poor and rich Malays, many seem to have recognised that the affirmative, pro-Malay measures of the BN’s New Economic Policy have become less a means for redistributing wealth to the disadvantaged than a vehicle for corruption and cronyism.

However, none of these parties is willing to touch free market capitalism that has been pushing the BN government to ignore the fundamental rights and needs of society. All of these opposition parties have unanimously stressed that they would present a better business-friendly environment for free market activities than what has been offered by the BN.

Many people have not been fully convinced by the opposition’s policies, but, because the pent-up feelings and frustrations are so high towards the BN and have become unbearable, they are willing to vote for opposition candidates regardless of what race or religion they belong to or what politics they represent. Many Malays voted for the DAP and, many Indians and Chinese voted for PAS – something which was unthinkable in the past.

The BN parties, in spite of their ‘Three Ms’ - Money, Media and Machinery – handing out election goodies and promises, could not mollify the people’s resentment. On the other hand, many ordinary people gave solid support to the opposition by offering to be volunteers in their campaigning work. Thousands of ordinary people thronged to opposition rallies to listen to opposition leaders’ speeches and willingly donated money to fund the opposition election campaigns. The HINDRAF supporters, with their slogan ‘People Power’, campaigned for the opposition parties regardless of their policies with the only aim of ousting the BN from government.

The hope for change has transcended the scare stories and fears engendered by government propaganda. In spite of the BN’s warnings that race riots like those of 1969 could be repeated if the BN status quo was not maintained, many just ignored them and voted for the opposition. (In 1969 when the opposition denied the BN a 2/3 majority, the BN incited bloody race riots between Malays and Chinese in which hundreds of people died. The BN government used the racial riots as an excuse to form an emergency government under its control.) There was also widespread vote-rigging, vote buying, harassment as well as gerrymandering in this election which have denied the opposition more seats.

However, this election has to some extent united a racially divided society for a common goal and given confidence that, with united force, they have the power to change the status-quo. The election results also shattered the belief that BN hegemony could not be broken and opened possibilities for opposition parties to gain more ground or even rule the country.
BN hegemony undermined

Voters have turned against Abdullah Badawi and the BN because they are seen as having failed or, worse, as not having even tried hard. With the biggest setback for the BN, Abdullah’s tenure as Prime Minister could be short-lived. Many people, including UMNO rank and file members, are urging him to step down immediately and pass his premiership to his obvious successor, Najib Razak, the deputy prime minister. Former prime minister, Mahathir said in a statement: “He has destroyed UMNO, he has destroyed the BN, and he should be held responsible for this massive defeat …I think the Japanese would have committed harakiri”. However, Najib is just as closely implicated in scandals and this could give space for Abdullah to manoeuvre. The UMNO general assembly in November is expected to determine Abdullah’s fate but he seems unlikely to last beyond the next election.

UMNO’s coalition partners in the BN - the MCA, the MIC and GERAKAN (Chinese based party that mainly operating in Penang) - were badly battered in this election. UMNO also lost many of its traditional seats. Many of its supporters feel that the BN is past its heyday and will lose credibility in Malaysian politics if immediate action is not taken to revitalise it: ‘reform or become irrelevant’. The last time the BN lost its 2/3 majority, in the 1969 general election, the coalition structure was revitalised and strengthened by crossovers of some of the opposition parties into its fold, which badly undermined the opposition’s strength. At that time the BN had the full backing of the capitalist class to go all out to undermine the revolt of the working class, poor peasants and left forces.

However, at the present time, especially the foreign capitalists are not very satisfied with BN government policies such as the NEP that favours Malay capitalists and the reluctance to further liberalise the economy. The rampant corruption in the government apparatus and the mismanagement of funds has also affected the ‘laisser-faire’ activity of capitalism.

The day after the election, the share market plunged 9.5% - the largest single drop since the Asian financial crisis of 1998. This was a clear warning sign from international and local investors to the ruling BN government as well as the opposition parties to keep the economy favourable for free market capitalism; if not they would move their capital to other countries. The market recouped the losses in the following days after Abdullah and the opposition leaders promised to be market friendly. In order to maintain investors’ confidence with the hugely undermined BN government, Abdullah, in the Wall Street Journal Asia, stressed that the country would, “Remain a business-friendly and free market economy with powerful attraction for international investors”. Meanwhile all the Chief Ministers of the states under opposition control also reiterated that they would be business-friendly. Anwar asserted, “I may be in the opposition but I will not sacrifice the economic performance of this country. I give an assurance that we will be market friendly and implement all the initiatives…the country should be stable and we should be able to instil confidence among domestic and foreign investors.”

The ‘New Economic Agenda for Malaysia’ of the PKR and opposition, which advocates abolition of the NEP and further liberalisation of the economy, would indeed give more freedom for foreign capitalists to operate. In that respect, foreign capitalists are to a certain extent welcoming the outcome of these elections with the hope that they could get more room for manoeuvre within more open competition policies.

This is clear from the statements of capitalist advisers such as The Economist, which says the election result “is extremely good news for many reasons. The most basic is that democracies need a vibrant and credible opposition. Any party that stays in power for half a century is liable to show signs of complacency, arrogance and corruption, and UMNO is no exception”. US investment bank, Merrill Lynch, described the results as “a blessing in disguise for Malaysia in the long-term…The current status quo has been shaken and the government may address some of its shortfalls which will eventually help the competitiveness of the country”.

However as the New Straits Times editor put it: “Politics and the impact on the country’s leadership are undeniably part of any equations of what moves the market. But it is clear that for now, those who have invested in Malaysia are looking more outward than in”, because of the profound uncertainties in the global economy.

Anwar and the opposition

In this election, the success of the PKR in winning 31 parliamentary seats compared with one in 2004 and the overall success of the opposition parties, have increased the profile of Anwar Ibrahim, as the opposition’s leader and potential future prime minister. Anwar, who is a strong advocator of free market policies and market liberalism, could get the backing of the capitalist class to take over the reins of government if the BN or UMNO lost its credibility further. From now on, he could work towards strengthening further the opposition coalition. He could especially set out to get the support of the regional parties in East Malaysia (Sabah and Sarawak). They have a political culture distinct from peninsular Malaysia’s and could foreseeably shift loyalties in the event of a weakening of the BN coalition.

The success of the opposition coalition will also depend on whether they could work together under one umbrella with a distinct political agenda. At present PAS controls the state governments of Kelantan and Kedah, the DAP rules Penang and coalitions of the PKR, DAP and PAS have formed the state governments of Selangor, and Perak. A few days after the election there was strife among the coalition partners in Perak over choosing the Chief Minister and appointing the state government’s executive councillors. Since they represent different policies with a loose coalition of ill-matched parties, bickering among them is bound to emerge from time to time. If not overcome, this could be used by the BN to undermine the opposition’s standing among the masses. The ruling BN coalition could also try to use its unprecedented election setback to fuel racial sentiments in order to counter opposition policies such as abolition of the NEP and having a PAS Chief Minister in the DAP majority state of Perak. UMNO supporters are already circulating SMS messages widely, lamenting the Malays’ lost political power.

The opposition coalition also has to demonstrate business-friendly policies in practice to get the backing of the capitalist class, especially in the state governments under its control. It is expected that Anwar will be playing a key role in determining the direction of the states under opposition rule, especially in wooing investors and advocating free market policies.

The leaders of opposition coalitions range from social activists, professionals, intellectuals, pro-business advocators and former UMNO/BN leaders. However, most of them are highly regarded as not corrupted compared to BN leaders. With that in mind, the ordinary people have high hopes that they will carry out reforms in these states. The state governments under the opposition could take steps to make some reforms and introduce more democratic rights but they will be in a limited form within the confines of capitalism. But any reforms will still be welcomed by ordinary people who have been living for a long time under the highly autocratic and bureaucratic rule of the BN. Although the bureaucracy in these state governments is expected to be reduced, it will grow again if measures to involve the ordinary people in making decisions are not taken.

Nevertheless, how far they can go in reforms will depend mainly on the endorsement given by the investors and business community that control the economy. The reforms would also depend on the amount of public spending allocations from the BN federal government and state revenue. The uncertain global economy could also affect the state governments’ reform plans. This could trigger conflict between reform-minded leaders and pro-business leaders under the pressure for genuine reforms and democray from the masses.

Therefore the opposition coalitions in power in the states will be under pressure to fulfil the promises of reforms they pledged during the election campaigns and at the same time to maintain and accomplish the investors’ and business community’s requirements for profit-oriented policies. This will determine whether they can combine business friendly policies with fulfilling the needs of the masses better than the BN coalition government.

Without moving against big business and without socialist policies of public ownership and control, the room to carry out reforms locally will be extremely limited. Big mobilisations will be needed both at state and national level, pressing the demands of workers of all backgrounds. This poses the urgency of building a strong party of working and poor people that campaign in the community for their basic needs and wishes and adopts genuine socialist policies.

Socialist Party of Malaysia (PSM)

Since it has not yet been allowed to register, PSM has been contesting general elections since 1999, unfortunately on other opposition parties’ tickets. In the 1999 election the PSM contested on the DAP ticket while in 2004, it contested under the PKR ticket after it failed in negotiations with the DAP for 1 to 1 contests against the BN. In 2004 election the PSM candidates contested the Sungai Siput parliamentary seat and a state seat in Perak in three-cornered fights between the PKR against the DAP and the BN, got the second most votes.

In this year’s election the PSM contested three seats with the PKR ticket, including one parliamentary seat, and one state seat as an independent. This was after another failure of negotiations with the DAP for a 1 to 1 contest against the BN and for this reason, too, the PSM had to forfeit standing in other potential state seats in Perak where it has done tremendous work. Dr. Nasir Hashim won the Kota Damansara state seat in Selangor and Dr. Jeyakumar won the Sungai Siput parliamentary seat in Perak, significantly defeating the MIC president, Samy Velu. Meanwhile Arulchelvan, PSM secretary general contested in Semenyih state seat, in Selangor lost narrowly and Saraswathy contested Jelapang state seat in Perak as independent against DAP and BN candidates lost in big margin.

Under a regime which is semi-dictatorial, based on perpetuating racial divisions and outlawing, in effect, parties like the PSM, it is sometimes necessary to use the opposition party tickets as a kind of political flag of convenience in order to have the voice of workers and socialists heard in an election. But this is only acceptable if such parties like the PSM have the opportunity to put forward its programme, or parts of its programme, which are distinct or different from other bourgeois or petty-bourgeois forces.

It is particularly necessary in Malaysia to link the day-to-day struggles of the working class and the poor, as well as the poor farmers, with the idea of the socialist transformation of society. So radicalised has the situation become in Malaysia that both PAS and Anwar’s party PKR defend the idea of the welfare state and, in the case of Anwar, say it will be possible after the opposition takes power to concede even a living minimum wage. In this situation, it is possible to collaborate with such forces while, at the same time, stressing that the ‘market economy’ will not be able to meet these demands and therefore a socialist Malaysia is necessary.

In this election the PSM, unfortunately, was compelled to endorse the opposition manifestos, including those of the PKR and the PAS. This may have been a mistake but not an insurmountable barrier if, in the course of the election, the PSM positively put forward the case for radical socialism. A failure to do so would mean that those voting for the opposition would not see the clear, distinctive position of the PSM. If there is no difference in programme, the masses in general will vote for the big ‘radical’ or even ‘left’ force rather than the smaller one. A breakthrough for the PSM into a larger formation, capable of reaching out to all workers irrespective of their ethnic or racial origins, depends upon taking a clear independent class position.

With the changed political landscape, reform agendas will come forward and will be discussed by leaders as well as ordinary people. In this situation it would be the opportunity for socialists to put forward ideas such as nationalisation and workers’ democracy as well as workers’ control and management to relate the demands of workers on prices, jobs, crime and corruption to the need for socialist solutions. However, the uncritical approach of the PSM towards the opposition coalition could undermine their identity as working class fighters when the opposition parties that they supported favour capitalism or only limited reforms.

A new chapter is opening in Malaysian politics in which socialist ideas can come to be seen as the main alternative to capitalist deprivation and oppression. It is the role of socialists to explain to the workers and youths who are looking for a way out of their plight the limitation of reformism in a capitalist context and the need for a working class leadership to genuinely unite the multiracial society of Malaysia by putting forward socialist solutions.

19 MARCH 2008


Price of petroleum is set in casinos of finance capitalism

We have been hit by a tsunami of energy price rises. A flood of speculative activity in oil markets has produced a huge bubble that will inevitably collapse in coming months. Record prices for fuel have given a vicious twist to inflation, pushing up the cost of living for workers everywhere. Higher fuel costs are propelling the US, Britain and other economies ever closer to a severe recession.
Why do soaring oil price rises have such a devastating effect? What lies behind the price surge? What effect will pricey oil and speculation have on the global economy?

The price of crude oil recently surged to an all-time peak of $139.12 a barrel (42 US gallons/159 litres). At the end of 2006 oil was about $60/b, and about $90/b at the end of 2007. Since the beginning of this year, the prices leapt from around $100/b to the current level.

This has resulted in a surge in pump prices for petrol and especially diesel in Britain, Europe and the US. Dearer diesel fuel has provoked blockades by lorry-drivers, farmers and fishermen. Airlines are imposing surcharges and cutting back on their flights. In Britain, the US and elsewhere domestic gas, electricity and heating fuel bills have also soared.

Higher energy costs, moreover, are a major factor in the worldwide explosion of food prices. The increased cost of fertilisers, packaging and transport has worked through to the markets and shops. At the same time, the diversion of agricultural production to bio-fuels (mainly in response to the high cost of oil) has been a factor in reducing the supply of basic foods like cereals and cooking oil, pushing up their prices. Food riots in many countries are a symptom of increasing hardship, starvation and impoverishment.

Clearly, money spent on fuel and food cannot be spent on other goods and services. So living standards are being depressed, while falling (non-fuel and food) consumer spending is undermining economic growth. Coming together with the severe credit crunch brought on by the sub-prime mortgage crisis, the oil-price surge is likely to accelerate the slide of the world economy into a painful downturn.

Who is to blame?

What are the real reasons for the sudden surge in oil prices? Some, like Gordon Brown, blame the oil producing states of OPEC (12 states, including Saudi Arabia, Iran, Iraq, Nigeria and Venezuela), who in the past have restricted their output to keep up prices.

Australia’s prime minister, Kevin Rudd, went further and called on the G8 nations last Sunday to “apply the blow-torch” to force OPEC to increase production.

Others blame Big Oil, the five colossal global corporations (Exxon/Mobile, ChevronTexaco, ConocoPhillips, BP and Shell) that dominate the refining and distribution of petroleum products.

Recently, however, accusing fingers have been pointed at the speculators, who have been feverishly gambling on commodity exchanges in New York, Chicago and London, seeking to profit from surging oil, mineral and food prices. What is the truth?

In 1973 (as a reaction to the Arab-Israel war) and 1979 (after the Iranian revolution) the OPEC producers imposed oil embargoes which quadrupled the price of oil in 1973 and doubled it in 1979. On both occasions, the oil price “shock” triggered a slump in the world economy.

In the recent period, as the price of crude has soared, the OPEC producers have certainly gained huge increases in oil revenue, as have non-OPEC producers like Russia. But it seems unlikely they have been restricting their output (in any case, OPEC now accounts for only 40% of world oil production). In fact, they have probably been pumping oil to something near their maximum capacity.

The oil regimes have welcomed price increases as compensation for the sharp fall in the value of the US dollar (in which oil is priced). In real, inflation-adjusted terms, the 1979 peak of $39.50 was only surpassed in May this year. But their strategists now fear that excessively high crude prices will provoke a world recession, leading to a fall in demand for oil and a disastrous slump in their oil revenues. They blame the speculators.

Big Oil also blames the speculators. These highly profitable corporations, however, are far from blameless. Just as the producers have always sought to maximise their revenue, these oligopolies have always manoeuvred to maximise their profits from pumping, refining and distributing petroleum products. For instance, as crude prices rose between 1999 and 2006, US oil refineries increased their profit margin per gallon of gasoline from 22.8% to 53.5%. Today, their profit margin is no doubt even higher.

Yet Big Oil has been very reluctant to invest in major exploration projects or additional refining capacity, fearing that prices will drop as the economy slows in the next few years. Since 2005, the big five have handed back $170 billion to their shareholders through share buy-backs rather than invest these profits in more capacity – or renewable energy sources.

In the current situation, however, the main responsibility for soaring oil prices appears to lie primarily with the big financial speculators who are playing the volatile commodity markets. The price of petroleum, a product absolutely essential to the functioning of society, is being set in the casinos of finance capitalism.

Oil as a financial asset

With the fall in interest rates (as central banks struggle to counteract the effects of the credit crunch), big investors like hedge funds, investment banks and pension funds have turned to the commodity markets in search of higher returns. While low interest rates have reduced the return from some other financial assets, the rise in crude oil and other commodity prices offer the prospect of big gains from commodity futures.

A ‘future’ is a contract to buy a consignment of oil or another commodity at a certain price on a certain date. Normally, they are used by those trading the physical commodity - producers, merchants and distributors - to smooth price fluctuations and control their cash-flows.

Speculators, on the other hand, treat commodities as a financial asset. They buy futures on the expectation that, on the due date, the consignment will be worth more than they actually paid for it under the future contract, so they can sell it at a profit. Even if the price difference is relatively small, speculators can make big profits if they trade on a large scale.

The capital flowing into major commodity funds shot up from $13 billion in 2003 to $260 billion today. Not surprisingly, hedge funds (unregulated, private clubs of hyper-rich speculators) and investment banks are involved, using huge sums of borrowed cash to speculate in futures and other complex financial instruments, such as options and swaps.

Moreover, they can acquire a future by advancing a ‘margin’ of only 7% of the value of the contract. But the biggest speculators in commodities recently have been the big pension funds. They have been investing in so-called ‘index funds’, groups of big investors which automatically buy futures when their projected yield exceeds the average of a broad index of shares or bonds.

Working hand in hand with big investment banks (which rake in a fortune in fees), the pension funds have found loopholes that enable them to avoid regulations restricting speculative trading on commodity markets.

In 2000, the US government, in response to lobbying by energy traders like Enron, relaxed the regulations on trading in commodity markets. Since then, there has been a six-fold surge in trading volume. “Over the last five years, investors have become such a force on commodity markets that their appetite for oil contracts has been equal to China’s increase in demand over the same period, said a hedge fund manager who testified before Congress … last month…” (Washington Post, 6 June 2008)

Pension funds gamble

George Soros, who made his own fortune from gambling on world currency markets, warns that the pension funds’ index trading is exaggerating price rises and creating a dangerous bubble in oil and other commodity markets. Pension fund managers, of course, strenuously deny this.

A spokesperson for the California Public Employees’ Retirement Plan denied that their futures investments were having any significant effect on the market. “The price spikes stem from fundamental supply and demand dynamics.” (Financial Times, 4 June 2008) Their line is that their investments simply follow rises in oil prices that arise from increased demand and short supply.

The speculators’ story is being backed up by political leaders. Both Gordon Brown and US Treasury secretary Paulson blame “lack of balance between supply and demand”. The US Commodity Futures Trading Commission – a sleeping watchdog – says that “broad-based manipulative forces” are “not driving the recent higher futures prices in commodities across-the-board.” (Financial Times, 29 May 2008)

What is the truth? There is no doubt that, as a broad trend over recent years, oil prices have been pushed up by supply and demand factors. Strong growth of the world economy after 2003 (averaging 5% a year) and even higher growth in China and India (over 10% a year) undoubtedly created exceptional demand for oil.

At the same time, supply has been restrained by a series of problems. Globally, the production of crude oil is rising faster than the discovery and development of new reserves. Some experts argue that ‘peak oil’ has already been reached and from now on reserves will inevitably decline.
In any case, recently discovered reserves are mostly more costly to exploit and transport because of their location (arctic regions, deep sea, etc) or poor quality (for example, high sulphur content, requiring more costly refining).

Geo-political factors have also pushed up prices and provoked volatility in oil markets. The turmoil in the Middle East provoked by the invasion of Iraq by US and British imperialism – aimed at controlling the region’s oil fields and securing cheap oil – has undoubtedly pushed up oil prices.

The disruption of supplies, for instance, from Iraq and Nigeria, the impact of hurricanes in the Gulf of Mexico, and scares of disruptions (fears, for instance, of a US attack on Iran) have all added to the volatility.

In addition, the fall of the US dollar, the currency in which oil is priced, has led producers to increase the dollar price in order to maintain their oil income in terms of stronger currencies like the euro.

Speculation inflates prices

But are these forces of supply and demand sufficient to explain the recent surge in crude oil prices? Supply and demand have fluctuated only slightly since oil was $60 a barrel at the end of 2006. There have been no big supply shocks recently. Demand, moreover, has declined slightly as a result of a slowdown in the US and some European economies. “Consumption has been falling for the past two and a half years.” (The Economist, 29 May 2008) Normally, oil prices would be easing downwards under these conditions. Yet they have exploded – and the obvious cause is speculation.

The real reason for the oil price explosion was recently spelt out by a veteran Wall Street oil analyst in testimony to a US Congressional committee that is investigating the oil market. Fadel Gheit of Oppenheimer & Co told the committee: “I believe the current high oil prices are inflated by as much as 100%. I don’t think industry fundamentals of supply and demand justify the current high prices, which I believe, are driven by excessive speculation.” (Wall Street Journal, 20 February 2008)

“There is a total disconnect between supply and demand” and the price of oil, Gheit testified. Oil companies can profitably obtain crude oil for $15 to $20 per barrel. Historically, the price of crude has been about three times the extraction price. So oil should be selling at $45/b. “Anything over $45 a barrel is all fat.”

Interviewed by Foreign Policy magazine (www.foreignpolicy.com, November 2007), Gheit said: “I truly believe that major investment banks and a large number of high-risk-taking financial players have seized control of the oil markets, especially in the last six months… Financial institutions, while making billions of dollars in profits, are wrecking global economic growth. The same bubble that happened in housing and tech stocks will come back and haunt us.”

When the bubble bursts

Soros has warned that the oil bubble will inevitably burst. Today’s speculative frenzy, he says, is similar to the situation before the 1987 stock exchange crash. “If the trend were reversed and the [pension funds and other] institutions as a group head for the exit as they did in 1987, there would be a crash.” In fact, the flow of speculative capital into energy companies has artificially propped up share prices on major stock exchanges. A flight from these companies would undoubtedly trigger a major crash.

The 2006 collapse of the hedge fund Amaranth Advisors, with $6 billion losses from trading oil and gas futures, is a warning of things to come. If there are major drops in energy futures, warns a financial analyst, they will all want to get out and it will be “like entering a revolving door at the wrong time in the wrong direction.” (Peter Beutel, MarketWatch, 30 May)

The soaring prices of petrol and diesel are already aggravating the downturn in the US economy provoked by the credit crunch. The effect of tax rebates just sent out under the US government’s £150 billion stimulus package will be cancelled out by increased fuel prices. The US slowdown, moreover, is already acting as a drag on Europe, Japan and elsewhere.

The 1973 and 1979 OPEC price rises hit the world economy as sudden shocks. Over the last couple of years there has been a slow-motion shock – about to climax in a self-inflicted knock-out blow for the advanced capitalist economies.

The signs are that oil is rapidly approaching its ‘breaking point’ or ‘demand destruction point’, where it becomes so expensive that demand for oil falls away. This is already happening in the US. As a result, oil prices will inevitably decline, probably quite rapidly at a certain point.

Chaos or planning?

“Because the price has been driven up by speculative money… the fall will be dramatic,” says a Commerzebank economist. (Financial Times, 28 May 2008) But the return to lower price levels will come too late to prevent an economic downturn. Moreover, lower prices – and therefore reduced oil revenue - will spell economic and political crisis for many of the oil-producing regimes.

Now, after eight years of unrestrained speculative activity on commodity markets, the US Commodity Futures Trading Commission, under int-ense pressure from Congress, has announced that they are carrying out an investigation in conjunction with the British Financial Services Authority.

Calls for more transparency and stricter regulation are mounting. Political leaders have been shaken by fuel protests, while manufacturing firms are screaming that their profits are being squeezed by higher commodity prices.

There may well be moves to curb some of the most predatory activity of the speculators. Under capitalism, however, regulation never has much effect.

Speculators always find a way to evade new regulations, especially in globalised financial markets. In any case, new regulations will be too late. The commodity bubble is near bursting point and the damage will be done before new controls could be implemented.

The frenzied speculation in commodity markets – like the sub-prime crisis – arises from the chaos of capitalism, where big oil corporations and ultra-rich financiers compete for the biggest share of the profits.

Capitalism is incapable of securing and supplying vital energy, food and raw materials in a balanced way that would meet the needs of society as a whole. They will never take adequate measures to conserve natural resources, protect the environment and combat global warming. Capitalist governments and giant corporations are taking only token measures to develop alternative sources of safe, renewable energy.

Take over Big Oil

Sky high energy prices are a disaster for working people everywhere. The chaos in commodity markets calls out for system change. We need a socialist approach, based on:

Nationalisation of the oil and gas corporations (with minimum compensation on the basis of proven need). Run the energy industry as a public body under democratic workers’ control and management.

Plan the development and distribution of energy to meet the real needs of the economy and working people.

Re-nationalise the big electricity, gas and water utilities (currently dominated by five big monopolies) on similar lines.

Appeal to the workers’ movement in other countries to fight for a similar programme with the aim of developing an international plan for energy.

Direct massive resources into research and development for safe, alternative sources of renewable energy.

Lynn Walsh, CWI
11 JUNE 2008


Campaigning on the ‘left’ but preparing to rule on the right

After the final state primaries, Barack Obama has effectively secured the Democratic nomination for the presidential election in November. The fact that the contest was between an African-American and a woman symbolises deep social changes in the US.

The two campaigns were quite different, however. Hillary Clinton arrogantly presented herself as the rightful, dynastic heir to the Democratic presidency, and she relied on a traditional, top-heavy election machine. Obama, though a Senator, has presented himself as an insurgent outsider. Massive rallies (e.g. 75,000 in Portland, Oregon) showed that he has aroused a ‘movement’, mobilising more young people and blacks than in the past (35% of primary voters compared to 29% in 2004). Many of his supporters were voting for the first time.

Obama’s grand themes have been optimism and change. He has promised to “create a new kind of politics”, to “transform this country”, and “create a kingdom right here on earth”. Will Obama deliver on the massive expectations he has aroused? For millions, he appears to be promising better conditions of life and a brighter future.

There is no joy in treading on people’s dreams. But Obama’s own statements show that he is tied to a big-business agenda. Like previous candidates (including Bill Clinton) he is campaigning on the left but preparing to rule on the right. On the housing crisis, for instance, with up to two million families now facing foreclosure, Obama’s proposals are even more limited than Clinton’s.
He advocates tax credits (of around $500) to homeowners. But he opposes a moratorium on foreclosures, a freezing of mortgage interest rates, and massive government support for distressed home-buyers. Under pressure of a worsening situation, however, he might – as president – be forced to implement more effective, emergency measures to dampen a backlash against the housing disaster.

At the start of his campaign, Obama stressed his opposition to the Iraq war (which put him ahead of Clinton who had voted for war). More recently, he has stressed that he will defend the interests of US imperialism. He promises to take a hard line against Iran. He is advocating another $30 billion of US aid to the state of Israel, and has endorsed the annexation of Arab East Jerusalem. The blockade of Cuba, he says, should continue, and he supports US military aid to the repressive Uribe regime in Colombia.

Obama boasts that a big slice of his election funds has come from small donors (giving under $200 each). But he has also collected millions of dollars from Wall Street executives and the heads of major corporations. Representatives of these power brokers are involved on a weekly basis in Obama’s campaign planning. While the grassroots movement provides the votes, representatives of the ruling elite steer Obama’s policies.

Big business candidates

In reality, November’s presidential election will once again be a contest between two big-business candidates, rival representatives of the Dem-Rep duopoly that dominates US politics. The money spent on the campaign will be phenomenal. Up until the end of April, Obama had spent $225.5 million, Clinton had spent $192 million, while McCain had spent $78.6 million – and millions more will be spent before November.

Can Obama beat John McCain in November? During the primary battle, Hillary Clinton suggested that Obama had a problem with “white working-class males”, an unscrupulous, thinly veiled reference to the race factor. Yet Obama not only won nine of the ten blackest states, he also won seven of the ten whitest. Race may still be an issue in November, but if Obama takes up economic and social issues – crucial for workers – he may well strengthen his support among white blue-collar workers.

It ought to be impossible for a Republican to win the presidency after eight disastrous years of Bush. Previously, McCain was seen as a rival to Bush, a ‘maverick’ Republican with liberal views. Since he entered the presidential race, however, McCain has swung to the right, shamelessly courting the hard-core Republican right.

He has dropped the issue of campaign finance (i.e. restricting big-business contributions). He supports making permanent Bush’s tax cuts for the super-rich. He enthusiastically supports Bush’s ‘surge’ in Iraq and advocates “fighting on to victory”. He has brutally opposed all legislative proposals to help homeowners facing foreclosure as a result of the housing crash and mortgage scams.

In short, McCain advocates more of the same. And it seems likely that Obama will win.

Is there an alternative? As in 2000 and 2004, Ralph Nader is running as an independent candidate (with the support of many of the left Greens). Nader is a radical populist, rather than a socialist, who campaigns on an anti-war, anti-corporate, and pro-worker platform. His main strength is that he implacably opposes the domination of the Democratic-Republican duopoly, rejecting the ‘lesser evil’ argument for voting for the Democrats. He attracts a significant layer of radicalised young people and workers who are looking for a real alternative.

Nader’s weakness, however, is his unwillingness to use his campaigns (in 2000 he won 2.8 million votes – 2.7%) as the launch-pad for building a political alternative. This time, Nader’s vote may well be squeezed by enthusiasm for Obama.

Mass party on the left

Nevertheless, his campaign points in the direction of what is urgently required, a mass party on the left, based on unions, community organisations, minority campaigns, etc, that would give a political voice to the disenfranchised working class. For these reasons, our sister party in the US, Socialist Alternative, advocates a vote for Nader.

November’s elections for president, Congress, and state assemblies will most likely take place before any generalised movement of the US working class. But the 44th president will face stormy times. The organic crisis of US and world capitalism will produce volcanic workers’ movements that will shatter the Dem-Rep duopoly and transform US politics. Through one route or another, the US working class will emerge as a key political force.

In the last few years there have been some important precursors of the struggles to come: the organising strikes of janitors and other low-paid service workers; the New York transit strike (2005); the explosive immigrant rights movement (May 2006); and the massive anti-racist rally (September 2007) at Jena, Louisiana. On May Day this year, moreover, all 29 of the US’s West Coast ports were totally shut down by a strike of the International Longshore Workers’ Union in protest against the Iraq war - music of the future.

11 JUNE 2008


An unmitigated disaster

As the fifth anniversary of the fateful decision to launch the invasion of Iraq passes, the claims by the US administration that the 2007 troop surge has succeeded in quelling the insurgency and checking the slide to sectarian break up - claims that were being made loudly at the start of this year - are becoming fainter by the day.

More recent events have given pro-surge enthusiasts a cold shower, confirming that violence and instability remain the order of the day despite the extra 30,000 US troops.

A series of suicide bombings, including the late February attack on Shi’ite pilgrims making their way to the shrine of Iman Hussein in Kerbala, which left at least 40 dead, have served as a reminder of how little has changed for ordinary Iraqis and how precarious and fragile is the political and sectarian balance that constitutes present day Iraq.

So also has the other “surge” – the mini invasion of the Kurdistan Region by 10,000 Turkish troops. This was ostensibly to attack and destroy the mountain bases of the separatist Kurdish Workers Party (PKK), but in fact it was intended more as a warning to the rulers of the Kurdistan Region of Iraq not to push too hard for independence. This invasion showed the potential for the Iraqi nightmare to very quickly escalate into a regional conflict.

Then, to cap it all, the US administration has had to put up with the spectacle of Iranian President, Mahmoud Ahmadinejad, on a stately visit to Baghdad. On his arrival he was warmly greeted by Iraqi government ministers; a salutary reminder to George Bush that his military adventure in Iraq, designed in part to lessen the influence of Iran in the region, has had precisely the opposite effect.

Of course a real balance sheet of the invasion and occupation has to be measured over five years, not a few months. Looked at in this way there is no question that the whole thing has been an unmitigated disaster.

A disaster, first of all for the US establishment, especially the neo-conservative cabal surrounding Bush, who were the architects of this war. It was conceived firstly as a war for plunder, particularly intended to put US and other foreign oil corporations in control of the Iraqi oil fields, which contain the second largest known reserves in the world. Five years on, the idea of cheap oil gushing through Iraqi pipelines has faded. Production, at 2.4 million barrels a day, has not yet reached pre-war levels.

The war was also about prestige; it was meant to provide the world with a brutal demonstration of US military prowess. Instead, it has shown the limits of US power, exploding the myth that superior technology, devastating ordnance and control of the skies are all that is necessary in modern warfare. The US has the military capacity to destroy any force put in its way, but Iraq – and now also Afghanistan – have shown that holding ground that has been gained is a different matter.

The US military has been seriously overstretched by the Iraq conflict. Soldiers now have to endure gruelling 15 month tours of duty with obvious effects on morale. The five star chiefs at the Pentagon are well aware that the surge troop levels are unsustainable.

Almost 4,000 troops have been killed and around 60,000 injured. Troops today are provided with better body armour and better medical care than in previous wars. Because of this soldiers who are injured have a higher chance of survival, but this means that many of the 60,000 wounded are going home with severely life-changing injuries and disabilities.

$500 billion and rising

All this comes at a cost to the US of some $500 billion and rising - rising in fact by $275 million every day, with projections that expenditure will eventually reach $1 trillion or even $2 trillion, depending on how optimistic you are about the war.

And in military terms for what? US and British forces are not in control of Iraq. They are bunkered in fortified bases from which they make heavily armoured raids along the main thoroughfares, into town and city centres and some residential areas.

The Iraqi police and army are not in control either. Successive attempts to build local forces, made up of and commanded by Iraqis who would take the front line in the fight against the “terrorists”, have failed. In the main the first loyalty of the ranks of the police and the army is not to the government, but to one or other of the sectarian-based militias.

It is little wonder that opinion in the US has swung decisively against the war. Three out of every five people in the US want the troops home.

This is not to say that the war has been bad news all round! There are some people who have done very nicely indeed out of this mess. Iraq has been a bonanza for the private companies who have been handed lucrative no-bid contracts for security, construction and reconstruction and for provision of supplies and services in this the most privatised of all wars. In the wake of the US troops who charged into Baghdad followed the biggest army of private contractors ever assembled in a war; at one point there was one contractor/mercenary for every US soldier.

Death toll mounts

These profiteers aside, the Iraqi debacle is now a major headache for the US establishment. But whatever anxiety and discomfort they have been made to feel pales into insignificance when set alongside the catastrophe that has befallen Iraq and its people. Iraq Body Count records the number of civilian deaths at just under 90,000. This is the figure for documented deaths, but since the US has not bothered to keep an accurate count and since their accounting methods deliberately understate the true figure – only those shot through the back of the head are regarded as victims of sectarian attack by militias, while those killed in some other way are recorded as criminal killings and therefore not counted – the true figure is much higher. Some estimates put it at 600,000, some at closer to a million - and this in a country of 28 million people!

On top of this are the deaths due to malnutrition, poverty and disease. The Iraqi economy and most of its public services have been devastated. Official figures put unemployment at 17% and underemployment at 38%. The true figure is much much higher and in impoverished areas like the massive east Baghdad Shia slum, Sadr City, home to more than 2 million people, around 70% are out of work. Most Iraqis now have electricity for one or two hours a day. Many have no access to clean water. Services are at breakdown point in a country where everything is paralysed by war, occupation and civil war. Patrick Cockburn, journalist for The Independent, recently asked a Fallujah doctor what his hospital lacked and was told: “drugs, fuel, electricity, generators, a water treatment system, oxygen and medical equipment.” A woman patient cradling a child added: “The Americans provide us with nothing. They bring us only destruction.”
The US invasion destroyed the Iraqi state apparatus and put nothing in its place. In local communities, militia like the Mahdi army or the emerging Sunni groups have stepped in to fill the vacuum. They hope to build and consolidate their support base by organising and providing rudimentary services which the state no longer provides - much as Hizbollah has done in parts of the Lebanon.

Real power in Iraq has now become localised. It is the rival and warring militias who now have effective control. With the breakdown of the central state and centralised economy has come the emergence of parallel localised economic activity and, with it, the development of corruption on a massive scale.

The 2006 Baker Report estimated that 500 million barrels of oil per day were being stolen. One Iraqi expert has recently estimated the annual cost of corruption by state officials (insofar as it can be estimated) as $5-7 billion. A recent and quite ominous development has been the switch by farmers in large areas to the north and east of Baghdad from growing oranges, pomegranates and other fruits to cultivating poppies for opium.

Another Afghanistan

If Afghanistan, with its growing insurgency and its suicide bombers, has become another Iraq, then Iraq, with much of its territory now under the control of local militias - some seeking to fund themselves through the heroin trade - is fast becoming another Afghanistan.

This is the backcloth against which any claims about the success of the surge must be measured. It is true the number of soldier and documented civilian deaths dropped off in the last months of 2007. All such figures are, however, relative. The figures are down on the horrific upsurge in killings that took place in 2006 and the first half of 2007. But the civilian death toll for the last six months of 2007 is higher than it was in the first years of the occupation.

As far as military casualties are concerned, 2007 saw more US and other coalition soldiers killed than in any previous year since the invasion. The British were effectively pushed out of Basra by Shia militias, especially the local groups linked to the Mahdi army, and are now bunkered in their last main base in the airport.

The reason the violence dipped for a time - figures for February 2008 show that it has started to rise again - had little to do with extra troops guarding intersections in Baghdad. The real explanation lies in the decision of Moqtada Al-Sadr’s Mahdi army to call a six month ceasefire from August 2007 and, alongside this, the emergence of a 70,000-strong Sunni militia, the Awakening, which has co-operated with US forces in taking on the Iraqi variant of Al Qaeda in its former strongholds in the Anbar province and other Sunni districts around Baghdad.

The answer to the question of whether the recent fall in the death toll was a temporary blip, or whether it indicates a longer term trend, is to be found in the reasons these militias have acted as they have.

Leaving aside the occupying forces who have been responsible for the deaths of tens of thousands of Iraqis, the violence over the last few years has fallen into two main categories. On the one hand there has been the insurgency conducted mainly, but not exclusively, by various Sunni militias targeting the occupying troops. On the other, there has been a sectarian conflict, mainly between Shia and Sunni groups, but at times involving fighting between Arabs and Kurds in divided northern cities like Mosul and Kirkuk.

Most commentators now point to the February 2006 destruction of the Shia Askariya mosque in Samarra by the Sunni-based Al Qaeda as the event that sparked civil war. In fact the Samarra bombing was one of a series of atrocities carried out by Sunni groups going back to the killing of Shia leader Al Hakim and 94 of his followers in Najaf in 2003. The main Shia Militias, the Madhi army and the more directly Iranian-linked Badr Brigades, have retaliated with a campaign of assassinations, carried out with the co-operation and assistance of their members in the police.

Battle for Baghdad

However, there is no doubt that in the aftermath of Samarra the battle between Sunni and Shia reached new levels. The conflict centred on Baghdad, home to 25% of the Iraqi population, where Sadr’s Mahdi Army launched a major offensive to drive Sunnis from large parts of the city.

The battle for Baghdad, which lasted into 2007, was won by Sadr and his Shia fighters. Two thirds of the city was left under Shia control with the Sunnis driven out; some to the remaining Sunni areas in the city or to surrounding provinces, others to join the 4.2 million refugees either in exile or in the desert camps that have been set up in Iraq to accommodate them.

Facing the prospect of military defeat at the hands of the Shia, a section of the Sunni population was prepared to lean on the US to get some military breathing space. The Awakening militia was formed by Sunnis to crack down on Al Qaeda, whose bombing campaign was fuelling the Shia backlash and whose attempt to declare a Sunni Islamic state in their areas of influence was alienating big sections of the Sunni population.

The US, acting on the basis that the enemy of my enemy is my friend, agreed to provide this force with weapons and pay its recruits, ignoring the fact that these were, in the main, former insurgents including former members of Al Qaeda.

Meanwhile, the loosely organised Mahdi army was growing and local units were determined to extend the sectarian offensive beyond Baghdad. Sadr called a six month ceasefire, which has now been extended, in order to consolidate the gains made in Baghdad and gain a firmer control over his forces - in part to curb some of the excesses which threatened to repel sections of his own support base.

Not surprisingly the violence dipped. All that the extra US troops have done is draw military lines around the new sectarian realities created by the Shia gains in the battle for Baghdad. Twelve-foot walls are being built, Belfast-style, to separate the rival communities.

International parallels

In any conflict of this character there will be pauses, even temporary periods of equilibrium where the rival forces balance each other out and the protagonists choose to step back for a time. In Northern Ireland the exhaustion of a generation of paramilitaries who had fought for thirty years led to the decision to call a halt to their campaigns. The civil war in Lebanon ended when Syrian troops intervened, effectively freezing in place the front lines that had been established in 15 years of fighting.

In neither case did the end of the fighting represent a solution or even a step towards a solution. Peace processes left in the hands of the same old sectarian forces are nothing more than a continuation of conflict by other means. They will be prone to break down at any point.
The particular conditions of Northern Ireland and the Lebanon have meant that the equilibrium has lasted for an extended period. There is no such prospect in the turbulent conditions of present day Iraq.

There are any number of directions from which things can quickly unravel. Past precedents of arming and financing “former” insurgents will give the US generals little comfort in their dealings with the Awakening. In the spring of 2004 they faced the threat of a simultaneous revolt by Sunni militias and the Mahdi army. Their recently constructed Iraqi army fell to pieces, its forces deserting or going over to the insurgents en masse. Having failed to capture Fallujah, they formed and armed a Fallujah Brigade and handed the city over to them. The Fallujah Brigade was made up of the very people the US had been fighting. Thomas Hicks, in his book Fiasco, accounts what happened next: “It wasn’t long before the Fallujah Brigade became indistinguishable from the insurgency. Wearing their old Iraqi uniforms some of their members, far from being “helpful” began shooting at Marines….The eight hundred AK-47s issued to the Brigade wound up in the hands of insurgents, as did some heavy machine guns and rocket propelled launchers.”

The relationship with the Awakening militia is likely to have a similarly unhappy ending. The group has already been involved in skirmishes with the police and government forces, who are also armed by the US. An Awakening member recently told The Independent correspondent, Patrick Cockburn, that they “intend to renew the battle for Baghdad whenever they think they can win it.”

The decision of the US to partially depend on armed Sunnis is only one of many lit and smouldering fuses that could easily and rapidly set off a rapid re-escalation of the violence. Another is the situation that is brewing in the north - up to now the only area of the country that has remained “stable” since the occupation began.

Kurdish independence

The Kurdish region is now independent of Baghdad in all but name. Because Turkey refused to allow invasion forces to enter from the north, the entire Kurdish area was seized by the militias of the two main Kurdish parties, the PUK and the KDP. They are nominally united, running a common list in elections, but in reality they have divided the region between them.

There has been no open declaration of independence, but in practice the Kurdish region is now a separate entity. Officially it is known as the Kurdish Region of Iraq, but its representatives routinely drop the words “of Iraq”. It is the Kurdish flag and not the Iraqi flag that is flown.

So far the Kurdish leadership has accepted this status of statehood without a formal state, because they know that to openly take the next step could provoke a Turkish invasion. The Turks for their part, are using the waning influence of Baghdad to secure their interests in the region. The Turkish government is negotiating oil concessions with the Kurdish “Regional” government and Turkish companies have been heavily investing in the area.

Another key factor in staying the hand of the Kurdish leadership is the still unresolved status of the major cities of Kirkuk and Mosul, both of which have mixed populations and are ethnic tinderboxes primed to explode.

Kirkuk is of key importance as it sits on top of massive oil reserves that would be essential to fund a Kurdish state. A referendum, due at the start of 2008 on whether Kirkuk will become part of the Kurdish “Region”, has been postponed for six months. The Kurds are using the extra time to try to increase the Kurdish population of the city, thus establishing facts on the ground that they hope will decide the referendum in their favour.

The White House may in public be sticking to the strategy of building up a centralised power-sharing Iraqi government and alongside it, a national army that will take the front line in the battle against insurgents. But in practice what the Americans are doing on the ground is somewhat different. Along with their lapdogs in Downing Street, they have in effect ceded power in Basra and the south to rival Shia militias, in and around Baghdad they are now building a Sunni militia. In the north it is the Peshmerga who are in control.

Iraq is being torn apart as an entity. However, the idea that there can be a solution to all this through the emergence of three new ethnically homogeneous and therefore stable, states – a Kurdistan, a “Sunnistan” and a “Shiastan” – is well wide of the mark.

The ethnically mixed population of the major cities where the majority of Iraqis live, and the fact that Baghdad - geographically in the Sunni centre - is mostly under Shia control, rules out any such clean cut division. Any attempted partition would follow the Bosnian, not the Slovakian, model.

A more likely scenario is that there will be more of the same; a continuation of the chaotic fragmentation and the ever present danger of overspill into much worse conflict - not only in Iraq but with its neighbours drawn in. Turkey has already demonstrated its military intent. Had its recent invasion been extended, it could have been the final nail in the coffin of any notion of a unified Iraq.

Teheran’s increasing influence

The fragmentation of Iraq and the rise of the Shia has massively increased the influence of Teheran. The current situation suits the Iranian government who are happy to see US troops bogged down in this quagmire, knowing that this and the threat of massive retaliation by the Shia militias make it much more difficult for the US to launch any form of military assault against them.

Teheran’s support for the Shia militias does not mean that they want to see a separate Shia state. A genuinely independent Shia state controlling the Basra oil fields and with close ties to Iran’s minority Arab population could destabilise rather than strengthen Iran.

Similarly Saudi Arabia would view with apprehension the emergence of what would probably be a radicalised Shia state on its doorstep, fearing that it could trigger a revolt by its Shia minority, who just happen to live where much of the oil is.

Faced with this mess of its own making the US has no workable exit strategy. Ultimately the Americans may be forced into a Saigon style exit. Otherwise they will be forced to wheel and deal with the various forces that emerge, hoping against hope that circumstances will arise some time in the future that allow them to pull back most of their forces while leaving the oil wealth in friendly hands. A Democrat in the White House would no doubt tweak things, but would be faced with the same dilemmas as the current occupant.

Among serious commentators there is now almost universal agreement that the crude methods employed at the start of the occupation fuelled the insurgency and brought about the present mess. There is no doubt that this is the case. However in the arguments that are put forward, there is also an inferred opposite conclusion that is not true.

This is the idea that if they had gone in with enough troops; if they had employed Iraqis, not outside contractors, on reconstruction; if they had not sacked thousands of public servants through de-baathification; and if they had not stood down the Iraqi army; things might have turned out ok.

This idea that there could have been some kind of benign invasion by a velvet-gloved imperialism is false. In Northern Ireland it is now generally accepted that the crude repressive methods of the Heath government, including internment and Bloody Sunday, were mistakes that swung the Catholic working class youth behind the IRA.

This does not mean that, had the British State acted differently, the upheavals of the 1970s would have been largely avoided. By the time internment had been introduced the options open to the British government were limited. A different approach by the government would only have meant that the Troubles would have unfolded in a different manner - unless, that is, the working class had been able to intervene to stop the development of sectarianism and the emergence of powerful sectarian organisations.

The same is true in Iraq. With the decision to invade, the die of a violent backlash that would most likely lead to the disintegration of Iraq was cast. The Iraqi state, like other Middle Eastern states, was an artificial creation of Imperialism carved out of the crumbled Ottoman Empire. Under Saddam Hussein it was held together by the coercive methods of a brutal military state machine.

Blunders and mistakes

The US invasion toppled this machine, but could not replace it. Had they gone in with a larger force it would have made little difference in the long run. The invading troops were never going to be seen as anything other than an army of occupation. Even those Iraqis who welcomed the overthrew of Saddam Hussein had the attitude; “thanks very much – now go”. Resistance in some form was inevitable.

In order to attempt to rebuild an Iraqi administration, Rumsfeld, and his underling in Iraq, Paul Bremer III, decided to lean on the majority Shia and turn a blind eye to the Kurds. De-baathification and the decision to stand down the army were concessions made to try to keep the Shia groups onside.

Had they chosen differently and decided to keep the administrative and repressive structures of a beheaded Saddam regime in place, they would have been forced to base themselves on the Sunni minority and would have faced a revolt by the Shia majority. The country would still have unravelled - but from a different direction. Whatever the US had decided to do to consolidate their hold on Iraq would gone down in history as a “mistake”. The real mistake was the invasion. Once there, the army did what imperialist armies do in such circumstances. They embarked on a policy of brutal and blunt military repression, indiscriminate killing and torture, all intended to bludgeon the population into submission.

This does not mean that sectarian civil war, chaos and division was inevitable from the outset. If an opposition to the occupation had developed which united the people of Iraq - Sunni, Shia and Kurd - things could been very different. Indeed it has all along been the greatest fear of the US that such an opposition could emerge - as their obvious nervousness at the co-operation between Sunni and Shia militias at the time of the 2004 seige of Fallujah clearly showed. They have preferred to deal separately with the various sectarian-based militias, parties and religious leaders, balancing them off against each other, partly to make sure the Iraqi people stay divided.
There is no possibility of a united resistance so long as it is led by tribal and religious leaders, or by those who act as local shadows of outside powers like Iran. This fact alone makes a nonsense of the stance imposed on the anti-war movement by the Socialist Workers Party in areas like Ireland, where they run the movement in a typically undemocratic manner. The SWP’s refusal to criticise either the policies or the methods of any of the insurgent groups and militias in Iraq leaves the questions and doubts workers and young people have about what is going on unanswered and thereby limits the support the anti war movement can develop.

Workers’ struggle

Over the past five years there have been significant struggles that have brought workers into confrontation with the occupying forces, the government and tribal and religious organisations. There have been demonstrations by the jobless, strikes over wages and powerful campaigns against privatisation. Last June oil workers took strike action against the new draft oil law, which will, in effect, hand control of Iraq’s oil over to the foreign oil companies.

These movements have faced stern opposition. Demonstrations demanding jobs have been attacked. The British have used thugs supplied by tribal leaders to break up the picket lines of oil workers on strike for wage increases. One of the first acts of the Bremer administration was to cut wages, while maintaining Saddam’s anti-union laws that prohibit strikes in the public sector, which is defined that it includes virtually the whole workforce. The al-Maliki government responded to last year’s oil workers’ strike by calling out the army and issuing arrest warrants for the union leaders involved.

The only way a united opposition to imperialism can develop in Iraq is if is built around class issues and is based on the working class and the urban and rural poor. This means adopting an independent class position – not only against the occupation forces, but also independent of and in opposition to the present al-Maliki-led government, the sectarian religious parties and any sectarian attacks carried out by their militias. Much time has been lost, but there still exists the basis for the emergence of such a class-based movement in the workplaces and the communities.
How could this be done? If there were, for example, a campaign against privatisation that fought for the industry and resources of Iraq to be publicly owned and run democratically under a system of workers’ management and for the wealth created to be used to provide jobs, electricity, clean water and proper services, could, even at this late stage, gain major support among the working class.

These issues are already linked in the minds of the Iraqi people with the Occupation. Any struggle to take democratic control of the resources of the country would be inextricably linked with the struggle to force the occupying troops out. This is not just a military question, but one also of ideas and programme. A socialist programme that offered a real answer to the day-to-day problems faced by Iraqis could unify the resistance and leave no safe haven for the Occupation. It would also allow the resistance to appeal to the US troops in a class language they would understand. Given the discontent already there among the troops, this could lead to levels of discontent not seen in the US military since Vietnam.

Similarly an emerging socialist movement would immediately come face to face with the problem of sectarian attacks and with the forces who carry these out. The emergence of the Awakening militia and the Madhi army ceasefire have shown, albeit in a distorted form, that there is opposition among ordinary Iraqis to the atrocities carried out by the religious based militias.
The question that is now to the forefront is the need to organise defence of all working class communities, not just against the occupation but also against attack by sectarian forces. Northern Ireland has shown that mass mobilisations by the working class can have an impact on even quite powerful paramilitary organisations.

Democratically organised defence committees in every community could organise this defence and – again as Northern Ireland has shown – these bodies are most effective when they establish links across the sectarian divide. It goes without saying that under present conditions in Iraq where virtually every home has a weapon, such a defence would be an armed defence.

The National Question

Then there is the national question. A socialist movement would need to take account of the reality that there is no longer a unified Iraqi state and that the aspiration of the Kurds is unquestionably for independence. 80% of Kurdish adults voted in an unofficial referendum in 2005 and 95% of them opted for independence. A socialist programme for Iraq, as well as guaranteeing the rights of all national and religious groups, would also need to include support for the rights of the Kurds to set up an independent state.

An Iraqi socialist federation would certainly be faced with the unrelenting opposition of every surrounding regime. Rather than trying to resolve this through diplomatic deals, an emerging Iraqi socialist movement, for the sake of its own survival, would need to establish links with the working class of Turkey, Syria, Saudi Arabia and Iran. This could prepare for mass opposition in these countries to any attempt by these regimes to intervene militarily. It could also lay the basis for “regime change” on a regional basis and the building of a socialist federation of the region, in which boundaries that genuinely reflect the wishes of the local populations could be established.

This might seem a tall order - and indeed it is. But, there is no other way out that does not offer a future of unrelenting suffering to the people of Iraq and its neighbours. Those who find the idea of a socialist solution too hard a task should consider the question - is the alternative presented by US capitalism which has led already to perhaps 600,000 deaths and over 4 million refugees and which offers a future of hell without end, any easier?

Peter Hadden, Socialist Party (CWI Ireland)

24 MARCH 2008