Bangladeshi soldiers use earth mover during rescue operation at site of factory collapse in Savar, near Dhaka, Bangladesh, April 24, 2013. At least 161 people were killed. / AP
Statement from Labour Behind the Label:
Labour Behind the Label today mourns the senseless loss of life, after an 8 story building in Savar, Bangladesh housing 3 clothing factories collapsed this morning (24.4.13). Over 82 workers [now known to be at least 161 -JD] were killed in the wreckage and 800 people injured, with the death toll set to rise as further bodies are found. Labour rights groups and trade unions in Bangladesh and internationally are calling for immediate action from international brands following the collapse.
The building contained 3 separate clothing factories, which locals say housed around 6,000 workers. Following the collapse, activists were able to enter the ruins and discovered labels from brands including Primark and Mango, indicating that they were sourcing from the factories. Rana Plaza also produced for a host of well known brand names including C&A, Matalan and Wal-Mart.
This collapse follows the Tazreen factory fire in the same district that killed 112 workers five months ago, and the Spectrum Factory collapse of 2005 which caused the death of at least 64 workers. The speed of the garment industry expansion in the Savar area is an ongoing and pressing concern. Savar, just outside of Dhaka, has seen significant growth in garment factories in recent times, with factories being built on swamp land and without proper building regulations in place. Labour rights groups say unnecessary deaths will continue unless and until brands and government officials agree to an independent and binding fire and building safety program.
“It’s unbelievable that brands still refuse to sign a binding agreement with unions and labour groups to stop these unsafe working conditions from existing. Tragedy after tragedy shows that corporate-controlled monitoring is completely inadequate,” says Sam Maher of Labour Behind the Label.
She adds: “Right now the families of the victims are grieving and the community is in shock. But shortly they, and the hundreds injured in the collapse, will be without income and without support. Compensation must be provided by the brands who were sourcing from these factories, and responsibility taken for their lack of action to prevent this happening.”
Labour Behind the Label is calling upon all major brands sourcing from Bangladesh to sign the ‘Bangladesh Fire and Building Safety Agreement’ immediately to stop future tragedies from happening. The Clean Clothes Campaign, together with local and global unions and labour rights organisations, has developed this sector-wide program that includes independent building inspections, worker rights training, public disclosure and a long-overdue review of safety standards. This transparent and practical agreement is unique in that it is supported by all key labour stakeholders in Bangladesh and internationally.
Note to political cartoonists: time to revisit and update this:
Adapted (by Jim Denham) from an article originally written before the announcement of the new leadership, by Camila Bassi
One in five of the world’s populace now have new leaders for a decade’s term.
The 18th Congress of the Chinese Communist Party (CCP) was an assembly of the ruling class so tightly regulated that all that China’s people and the rest of the world saw was a well-orchestrated display of bureaucratic power.
Behind-the-scenes faction fights between the elites within the Party had already been settled for the sake of the ruling class’s survival.
The previous Vice-President Xi Jinping (a candidate accceptable to all of the Party’s factions) succeeded Hu Jintao as leader of the CCP.
After Xi and the No. 2 official, Li Keqiang, who becomes premier, the other top officials on the ageing Politburo Standing Committee, in order of their new rank, are Zhang Dejiang, 66, a North Korean-trained economist now running Chongqing; Yu Zhengsheng, 67, the Shanghai party boss; and Liu Yunshan, 65, the head of the Communist Party’s propaganda department, which is in charge of censorship. The final two on the seven-member committee are Wang Qishan, 64, known for his economic management skills, who will be in charge of anti-corruption efforts as head of the party’s discipline commission in the new government; and Zhang Gaoli, 66, the party boss in Tianjin.
Now seems an apt moment to pose the question, what defines the present political moment in China? I’ll provide a response through seven key observations.
1. The Princelings, the Populists, and the Bo Xilai affair
Two defining factions at the top of the CCP are the “princelings” and the “populists”.
The princelings tend to have familial roots in the Party and geographical origins in the economically prosperous coastal areas of the country. They are seen to represent business interests.
The populists tend to have climbed the ranks of the Party and to have come from more inland (poorer) Chinese provinces. They are perceived to speak more for the vulnerable social interest groups.
Bo Xilai, while head of Chongqing, had ambitions for the Politburo Standing Committee. Bo (a princeling) represented — through the since-coined Chongqing Model — one avenue for more general political reform in China. In this major city he drove through a combination of high state control, which included a high-profile (but selective) clampdown on organised crime, the promotion of Maoist “red culture”, and the courting of foreign investment alongside large-scale public provision.
Bo’s downfall came from the death of a British businessman and his related corrupt business dealings, but also from factional fighting and his challenge to Party convention. The significance? The reaction of many of the populace, which questioned the deep-seated corrupt nature of the Party itself and how Bo had risen to such prominence.
His downfall was the biggest event in China since the 1989 revolutionary uprisings centred on Tiananmen Square. With approximately 500 million Chinese netizens, the Party cannot control everyday life as it once could.
2. Troubled times for the Chinese economy
China’s economic growth has been slowing down for seven consecutive quarters and this year it will have the slowest economic growth rate since 1999.
The huge spending package launched in 2008 has, it is estimated, led to the building of half of all of the country’s physical assets within the last six years.
The “inevitable side effects of that stimulus — non-performing loans and potentially deflationary overcapacity — have not yet taken hold” (Pilling, 2012). Take housing as an example. About 30% of the country’s housing stock is currently lying empty. If we add to this that the economy has still to be rebalanced by the CCP from investment to consumption, and the economy’s dependence on exports to a recession-hit Europe, troubled days surely lie ahead.
3. working class protest and militancy
As surveyed in my article in Solidarity 258, both the quantity of working class protests in China has significantly increased this century and the qualitative nature has changed, with these protests becoming more militant.
As previously noted: “Whilst worker protests in the early 2000s predominantly involved laid-off workers from state-owned enterprises and rural migrants employed in the private sector, by the end of the decade a new group, or a ‘new generation’, emerged. Those born in the 1980s and 1990s have altered the nature of the migrant worker to one younger, better educated, more connected, and with higher expectations and more willingness to take on proactive demands.”
4. The rise of “middle class” discontent
This is less militant. So-called “middle class” protest in China is more about better government than the overthrow of the existing one. But the rise in discontent amongst middle-income Chinese includes currents desiring some form of bourgeois democracy.
Intense political discontents on housing, health, education, and the environment, are all fundamentally driven by a concern that the CCP pursuit of economic growth is at the expense of ordinary people.
The recent NIMBY protest in Ningbo against a petrochemical plant led to a concession by the local government to stop the plant’s expansion. This decision can be explained both by the fact that it occurred in the run up to the 18th Congress, during which the Party seeks an especially compliant population, and by the Party’s more general strategy (unlike the more violent one towards militant working class demands) of keeping the peace by piecemeal allowances.
5. Anxious maintenance of internal stability
Based on observations 1, 2, 3 and 4, an increasingly more assertive Chinese population — able and willing to take on its government — might well indicate that China is on the verge of a revolution.
One further factor needs to be brought into play for such an assessment, which is the ability of the CCP to (in its own words) “maintain internal stability”.
The Ministry of Public Security records the number of “mass incidents” rising from 8,700 in 1993, 32,000 in 1999, 50,000 in 2002, and at present 100,000 annually. More to the point, the Party is increasingly serious (paranoid even) about keeping control; currently spending as much if not more on the maintenance of internal stability than its defence force.
So, while my article in Solidarity 231 assesses the potential of an inspiring struggle against land seizures and for local democracy in Wukan village, any suggestion of meaningful political reform is tempered by the introduction of militias in Wukan since August of this year. This reflects, more generally across China, “the newest incarnation of a venerable approach to population control and social management” (Wagner, 2012).
6. The Sino-Japanese islands dispute and Chinese nationalism
The CCP is creating new facts on the water in its long-running maritime disputes with the Philippines and Japan.
Could this situation escalate further and draw China, Japan and the United States into a war? It cannot be ruled out.
Not unrelated is the nature and volatility of Chinese nationalism, which has deeply embedded within it a popular anti-Japanese racism, as seen in the recent wave of anti-Japanese demonstrations across the country. Herein lies a means for the CCP to unify the populace and distract them from the problems within by the problems without.
7. China in Africa
Pepe Escobar of the Asia Times (21 October) states: “The big picture remains the Pentagon’s AFRICOM spreading its militarized tentacles against the lure of Chinese soft power in Africa, which goes something like this: in exchange for oil and minerals, we build anything you want, and we don’t try to sell you ‘democracy for dummies’.”
A widespread view on the left, based on observations like this, is that US imperialism is the big bad evil, while China remains a palatable alternative. A serious assessment of Chinese imperialism is avoided.
China is now Africa’s largest trading partner and lends the continent more money than the World Bank. Chinese companies have entered profitable oil markets in, for instance, Angola, Nigeria, Algeria and Sudan, made big mining deals in countries like Zambia and the Democratic Republic of Congo, and are constructing what is claimed to be the world’s biggest iron mine in Gabon; additionally, land is being sought for large-scale agribusinesses, and physical infrastructure — to swiftly move capital and labour — is rapidly developing (French, 2012).
In terms of global geopolitics and imperialism, we need to take stock of what this means.
It is not so much the implications of any one of these observations but rather the consequences of them all climaxing and cumulating which makes China’s present moment so critical. Watch this space.
Associated Press (2012) ‘Successful pollution protest shows China takes careful line with rising middle class’. The Washington Post.
Bassi, C (2012) ‘China’s new worker militants’. Solidarity 258.
Bassi, C (2012) ‘Chinese workers fight for democracy’. Solidarity 231.
BBC (2012) ‘China’. BBC World Online.
French, H (2012) ‘The Next Empire’. The Atlantic.
Pilling, D (2012) ‘Xi should draw up a new social contract for China’. Financial Times.
Wagner, D (2012) ‘The Rise of the Chinese Urban Militias’. Huffington Post.
The Chávez victory in Venezuela’s presidential election last week, has been greeted with unbridled enthusiasm by some on the Stalinist-influenced left, and by a quiet gnashing of teeth and subdued wailing on the right. Others have taken a more nuanced view. There can be no denying that Chávez’s social programmes have brought real benefits to the poor. But the endemic corruption amongst the Chávista ruling elite, the lack of anything remotely resembling workers’ control of industry, Chávez’s unpleasant (but all too common amongst Stalinoid populists) penchant for antisemitism and some truly foul international alliances, mean that the regime cannot be considered ‘socialist’ except in the most debased and meaningless sense of the word. It is, perhaps, social democracy sui generis. The Chávez regime is also, quite clearly, what educated Marxists call ’Bonapartist‘ (to be precise, in the case of Chávez, “petty-bourgeois-democratic Bonapartism“).
Some Trots are very keen on Chávez, others slightly less so. Some are very critical indeed. But what would the Old Man himself have had to say? Well, we don ‘t need to speculate. Between Januay 1937 and his assassination at the hands of a Stalinist agent in August 1940, Trotsky lived in Mexico under the government of Lazaro Cárdenas - a regime very similar to that of Chávez’s. To pre-empt one obvious question about Trotsky’s generally charitable assessment of the Cárdenas regime: yes, of course, Trotsky was dependent upon the Mexican government for his survival and wasn’t about to do or say anything to piss them off. But Trotsky’s undertaking to Cárdenas not to “intervene in the domestic or foreign politics of this country” also meant that he was under no obligation to praise the regime: he could simply have stayed schtum.
As it was, Trotsky ventured some praise for the Cárdenas regime - and also some friendly criticism. But the crucial point is that he never recognises or describes the regime as ‘socialist.’ On the contrary, he writes:“it is not our state and we must be independent of the state. In this sense we are not opposed to state capitalism in Mexico; but the first thing we demand is our own representation of workers before this state. We cannot permit the leaders of the trade unions to become functionaries of the state. To attempt to conquer the state in this way is absolute idiocy. It is not possible in this manner peacefully to conquer power. It is a petty bourgeois dream…”
The article below is adapted and modified by Jim Denham, from an unattributed piece on the Workers Liberty website:
Above: Trotsky thanking the Cárdenas government (accompanied by cockerels)
Trotsky had been expelled from the USSR by Stalin in 1929, and spent the rest of his life trying to find a country which would let him live in exile. He arrived in Mexico on 9 January 1937.
Thanks to the efforts of Mexican Trotskyists, such as the renowned artist Diego Rivera, the Cárdenas government granted Trotsky asylum on the condition that he would not interfere in Mexico’s domestic affairs. Trotsky accepted this condition, in a statement on his arrival, promising “complete and absolute non-intervention in Mexican politics and no less complete abstention from actions that might prejudice the relations between Mexico and other countries”. (Writings 1936-37 p.86)
Trotsky was forced to break with the Mexican “Trotskyist” organisation, the LCI, after six months in the country, when the Mexican Trots (the LCI) issued a manifesto calling for “direct action” against the high cost of living, implying that workers should attack shops. Coming at the time of the Moscow trials and the attacks on Trotsky by the Stalinists in Mexico, this call by the LCI was particularly stupid. After Trotsky’s intervention, the LCI dissolved itself for the remainder of 1937.
Trotsky publicly supported Cárdenas’ expropriation of the oil industry. On 23 April 1938 he wrote to the Daily Herald in Britain, pointing to the hypocrisy of the British government and defending the nationalisation of oil of the grounds of national economic development and independence. He argued that the Labour Party should set up a commission to investigate how much of the “living sap of Mexico” had been “plundered” by British capital. (Writings 1937-38 p.324)
He also criticised some of his Mexican supporters. On 15 April 1938 Trotsky wrote to his closest collaborator, the US Trotskyist leader James P. Cannon: “Galicia, in the name of the revived League [LCI], published a manifesto in which he attacked Cárdenas for his policy of compensating the expropriated capitalists, and posted this manifesto principally on the walls of the Casa del Pueblo. This is the ‘policy’ of these people.” (Writings 1937-38 p.314)
Trotsky characterised the oil expropriation as a matter of self-determination. He wrote: “Semi-colonial Mexico is fighting for its national independence, political and economic. This is the basic meaning of the Mexican revolution at this stage… expropriation is the only effective means of safeguarding national independence and the elementary conditions of democracy.” (Writings 1937-38 p.359)
He compared “this courageous and progressive measure of the Mexican government” to the work of George Washington and Abraham Lincoln in the United States, adding that, “if Mexico should find itself forced to sell liquid gold to fascist countries, the responsibility for this act would fall fully and completely upon the governments of the imperialist ‘democracies’.” (ibid p.360)
He summed up his attitude thus: “Without succumbing to illusions and without fear of slander, the advanced workers will completely support the Mexican people in their struggle against the imperialists. The expropriation of oil is neither socialism nor communism. But it is a highly progressive measure of national self-defence.”
He reiterated his support, without losing sight of the character of the Mexican government: “The international proletariat has no reason to identify its programme with the programme of the Mexican government. Revolutionists have no need of changing colour, adapting themselves, and rendering flattery in the manner of the GPU school of courtiers, who in a moment of danger will sell out and betray the weaker side. Without giving up its own identity, every honest working class organisation of the entire world, and first of all in Great Britain, is duty-bound—to take an irreconcilable position against the imperialist robbers, their diplomacy, their press, and their fascist hirelings.” (Writings 1937-38 p.361)
A particularly important article of Trotsky’s, in the light of the current situation, is one on freedom of the press, which he published in the first issue of Clave magazine (October 1938).
In the summer of 1938 a Stalinist agent within the Cárdenas regime, Lombardo Toledano, began a campaign against the reactionary press in Mexico, intent on placing it under “democratic censorship” or banning it altogether. Trotsky was unequivocal in opposing this drive. He wrote: “Both theory and historical experience testify that any restriction of democracy in bourgeois society is, in the final analysis, invariably directed against the proletariat… Consequently, any working class ‘leader’ who arms the bourgeois state with special means for controlling public opinion in general and the press in particular is, precisely, a traitor.” (Writings 1937-38 p.417)
“Even though Mexico is a semi-colonial country, it is also a bourgeois state, and in no way a workers’ state. However, even from the standpoint of the interests of the dictatorship of the proletariat, banning bourgeois newspapers or censoring them does not in the least constitute a ‘programme’, or a ‘principle’ or an ideal set up. Measures of this kind can only be a temporary, unavoidable evil…
“It is essential to wage a relentless struggle against the reactionary press. But workers cannot let the repressive fist of the bourgeois state substitute for the struggle that they must wage through their own organisations and their own press… The most effective way to combat the bourgeois press is to expand the working class press… The Mexican proletariat has to have an honest newspaper to express its needs, defend its interests, broaden its horizon, and prepare the way for the socialist revolution in Mexico.” (ibid pp.418, 419-420)
Trotsky began to write about developments in the unions in mid-1938. Before a Stalinist-organised “Pan-American Trade Union Congress” in Mexico City in September 1938, which set up the Confederation of Latin American Workers (CTAL), he wrote (in the name of Diego Rivera) to denounce Toledano’s links with Stalin. He wrote that Toledano was “a ‘pure’ politician, foreign to the working class, and pursuing his own aims”. His ambition was “to climb to the Mexican presidency on the backs of the workers” and in pursuit if that aim had “closely intertwined his fate with the fate of the Kremlin oligarchy”. (Writings 1937-38 p.426)
His attitude seems to have hardened after the CTAL conference, when Trotskyists were excluded for their politics. He was also prompted by the increased attacks on him by the Stalinist bureaucrats in the unions. After Lombardo Toledano presented a dossier to the (Stalinist) Mexican trade union congress (CTM) in 1938, it voted “unanimously” for the expulsion of Trotsky from Mexico.
Then the August 1938 issue of the CTM magazine Futuro carried an attack on him by Lombardo, accusing him of organising a general strike against Cárdenas during the oil expropriations.
Trotsky distinguished between leaders and the unions: “Toledano of course will repeat that we are ‘attacking’ the CTM. No reasonable worker will believe this rubbish. The CTM, as a mass organisation, as a mass organisation, has every right to our respect and support. But just as the democratic state is not identical with its minister at any given time, so a trade union organisation is not identical with its secretary.” (Writings 1938-9, p.22)
Other attacks followed. The Mexican Communist Party (PCM) leader Hernan Laborde accused Trotsky of having links with General Cedillo (who had led an abortive coup against the government). The Stalinist agent Lombardo also claimed that Trotsky had met with fascists during a summer holiday trip. Trotsky’s response was to offer to participate in a public investigation into Lombardo’s charges.
Trotsky also sought to galvanise an opposition to the Stalinists, drafting a statement intended for publication. It stated: “[In Mexico] the unions, unfortunately, are directly dependent on the state” and “posts in the union bureaucracy are frequently filled from the ranks of the bourgeois intelligentsia, attorneys, engineers etc”.
He described the way these bureaucrats gave themselves a left cover by becoming “friends of the USSR”. He described how they kept control of the unions: “they ferociously trample on workers’ democracy and stifle any voice of criticism, acting as outright gangsters towards organisations that fight for the revolutionary independence of the proletariat from the bourgeois state and from foreign imperialism.” (Writings 1938-39 p.83)
Trotsky went further in November 1938, arguing that the trade unions in Mexico were “constitutionally statified”. He told his closest collaborators that, “they incorporate the workers, the trade unions, which are already stratified. They incorporate them in the management of the railroad, the oil industry, and so on, in order to transform the trade union leadership into government representatives… In that sense, when we say ‘the control of production by the workers’, it cannot mean control of production by the stratified bureaucrats of the trade unions, but control by the workers of their own bureaucracy and to fight for the independence of the trade unions from the state.” (Writings supplement 1934-40, p.791)
“In Mexico, more than anywhere, the struggle against the bourgeoisie and the government consists above all in freeing the trade unions from dependence on the government… the class struggle in Mexico must be directed towards winning the independence of the trade unions from the bourgeois state.”
He made it clear that revolutionaries would continue to work in the unions, even though they were partially integrated into the Mexican state. (Writings 1938-39 p.146)
He criticised the Cárdenas government’s second six-year plan in March 1939 for a participation proposal which “threatens to incorporate a bureaucratic hierarchy of the unions etc, without precise delimitation, into the bureaucratic hierarchy of the state”. He went as far as to characterise the unions as “totalitarian”. (Writings 1938-39 p.222, p.227)
This advocacy of intervention in even the most reactionary unions remained in all Trotsky’s articles until the end of his life. For example Clave carried articles in 1940 on the first congress of the STERM teachers’ union and on the 7th national council of the CTM, both characterised by little democracy.
Trotsky made few remarks on the nature of the Mexican regime in the first eighteen months of his asylum, and when he did, these were brief allusions. For example in the article on the freedom of the press in August 1938 he described Mexico’s democracy as “anaemic”.
He argued that “a semi-democratic, semi-Bonapartist state… now exists in every country in Latin America, with inclinations towards the masses”, adding that, “in these semi-Bonapartistic-democratic governments the state needs the support of the peasants and through the weight of the peasants disciplines the workers. That is more or less the situation in Mexico”. (Writings supplement 1934-40, pp.784-785)
What did Trotsky mean by Bonapartism? He had employed the concept to understand the regime in Germany before Hitler and to describe the situation in France in the mid-1930s. He summed it up succinctly in March 1935: “By Bonapartism we mean a regime in which the economically dominant class, having the qualities necessary for democratic methods of government, finds itself compelled to tolerate – in order to preserve its possessions – the uncontrolled command of a military and police apparatus over it, of a crowned ‘saviour’. This kind of situation is created in periods when the class contradictions have become particularly acute; the aim of Bonapartism is to prevent explosions.” (Writings 1934-35 pp.206-07)
In his discussion with comrades in November 1938, he explained: “We see in Mexico and the other Latin American countries that they skipped over most stages of development. It began in Mexico directly by incorporating the trade unions in the state. In Mexico we have a double domination. That is, foreign capital and the national bourgeoisie, or as Diego Rivera formulated it, a ‘sub-bourgeoisie’ – a stratum which is controlled by foreign capital and at the same time opposed to the workers; in Mexico a semi-Bonapartist regime between foreign capital and national capital, foreign capital and the workers… They create a state capitalism which has nothing to do with socialism. It is the purest form of state capitalism.” (Writings supplement 1934-40, pp.790-791)
Discussing the ruling party’s second six year plan in March 1939 (which had been endorsed by the CTM) Trotsky described how “the government defends the vital resources of the country, but at the same time it can grant industrial concessions, above all in the form of mixed corporations, i.e. enterprises in which the government participates (holding 10%, 25%, 51% of the stock, according to the circumstances) and writes into the contracts the option of buying out the rest after a certain period of time”.
Summing up he wrote: “The authors of the programme [i.e. the plan] wish to completely construct state capitalism within a period of six years. But nationalisation of existing enterprises is one thing; creating new ones is another… The country we repeat is poor. Under such conditions it would be almost suicidal to close the doors to foreign capital. To construct state capitalism, capital is necessary.” (Writings 1938-39 pp.226-227)
Trotsky never equivocated on the nature of the ruling party, including the character of the PRM (the “Mexican Revolutionary Party” created by Cárdenas). In his discussion with comrades in November 1938 he argued: “The Guomindang in China, the PRM in Mexico, and the APRA in Peru are very similar organisations. It is a people’s front in the form of a party… our organisation does not participate in the APRA, Guomindang, or PRM, that it preserves absolute freedom of action and criticism.” (Writings supplement 1934-40, p.785)
At the beginning of 1939, prospective candidates in the PRM resigned their posts and began to campaign for the presidency, which would take place in July 1940.
At the outset the candidates were Francisco Mujica on the “left”, Manuel Ávila Camacho in the centre and Juan Andreu Almazán on the right. The PCM and Lombardo threw their support behind Ávila Camacho, calling for “unity behind the only candidate that can defeat reaction”.
Trotsky condemned the support for Ávila Camacho offered by the CGT, and wrote: “At the present time there is no workers party, no trade union that is in the process of developing independent class politics and that is able to launch an independent candidate. Under these conditions, our only possible course of action is to limit ourselves to Marxist propaganda and to the preparation of a future independent party of the Mexican proletariat.” (Writings 1938-39 p.176)
Later he registered his attitude toward Diego Rivera, who had broken with the (Trotskyist) Fourth International and briefly supported Mujica. Trotsky wrote: “You can imagine how astonished I was when Van accidentally met the painter [Rivera], in company with Hidalgo, leaving the building of the Pro-Mujica Committee carrying bundles of pro-Mujica leaflets which they were loading into the painter’s station wagon. I believe that was the first we learned of the new turn, or the passing of the painter from ‘third period anarchism’ to ‘people’s front politics’. The poor Casa del Pueblo followed him on all these steps.” (Writings 1938-39 p.293).
Despite Mexico’s relative economic backwardness in the 1930s, Trotsky did not rule out the possibility that its workers might seize power – even before their counterparts in the US. (Writings supplement 1934-40, p.785) However he was concerned about a mechanical interpretation of permanent revolution as applied to Mexico by some of the LCI.
“The Fourth International will defend… [Mexico] against imperialist intervention… But as the Mexican section of the Fourth International, it is not our state and we must be independent of the state. In this sense we are not opposed to state capitalism in Mexico; but the first thing we demand is our own representation of workers before this state. We cannot permit the leaders of the trade unions to become functionaries of the state. To attempt to conquer the state in this way is absolute idiocy. It is not possible in this manner peacefully to conquer power. It is a petty bourgeois dream…
“I believe we must fight with the greatest energy this idea that the state can be seized by stealing bits of the power. It is the history of the Guomindang. In Mexico the power is in the hands of the national bourgeoisie, and we can conquer power only by conquering the majority of the workers and a great part of the peasantry, and then overthrowing the bourgeoisie. There is no other possibility.” (Writings supplement 1934-40, p.792, p.793).
Trotsky’s evaluation of developments in Mexico went through a series of stages and modifications, as the battle between the state and the working class was played out. In the last eighteen months of his life, in discussions with Mexican socialists, he further clarified his views on the nature of the regime and the ruling party, its relationship to the unions and on workers’ administration.
The first collaboration of note was with Francisco Zamora, a member of the editorial board of Clave who had also sat on the Dewey Commission. He was a professor of economics at the National University of Mexico and a member of the first committee of the CTM. Between October 1938 and May 1939 Zamora published a series of articles in the magazine Hoy, which contain some ideas influenced by Trotsky.
Zamora criticised the CTM and CGT leaders and pointed to how their bourgeois politics had accommodated with the Mexican state. He argued that the Mexican revolution, particularly in its agrarian relations, was unfinished. However he predicted that Ávila Camacho would not continue the work of Cárdenas, but rather destroy it.
Zamora also discussed the way the state represented the interests of the dominant class, although during periods of stalemate allowed the state “a certain momentary independence” – alluding to the idea of Bonapartism.
Around the same time Trotsky held discussions with the Mexican Marxist Octavio Fernández on the nature of the Mexican revolution. Between February and April 1939, Fernández published three articles in Clave with a wealth of statistical material dealing concretely with the Mexican social formation and in particular with the peasantry and the working class.
Fernández distinguished between the military-police form of Bonapartism of the Calles period and the “petty-bourgeois-democratic Bonapartism” of Cárdenas. He also argued that the expropriation of the oil industry was made possible by the international crisis of relations between the imperialist powers. He believed that further expropriations were unlikely as long as a bourgeois government was in power in Mexico. He nevertheless urged workers to push the nationalisations as far as possible, to press the government not to pay compensation, to set up control committees in factories and for price control committees. (León Trotsky, Escritos Latinamericanos 1999 pp.233-234)
In a later article in Clave, ‘Qué ha sido y adónde va la revolución mexicana’ (November-December 1939), Fernández warned that in Mexico, everyone was a “revolutionary” and for “the revolution”. This was because the Mexican revolution (1910-20) was “aborted”, in the sense of an unfinished bourgeois revolution – but in a country where the working class was increasingly becoming an independent factor.
Probably Trotsky’s most important discussion took place with Rodrigo García Treviño, an official at the CTM. Following the exchange, Trotsky wrote a paper on whether revolutionaries should participate in the workers’ administration established in the nationalised rail and oil industries (reprinted here). The key passage is this:
“The nationalization of railways and oil fields in Mexico has of course nothing in common with socialism. It is a measure of state capitalism in a backward country which in this way seeks to defend itself on the one hand against foreign imperialism and on the other against its own proletariat. The management of railways, oil fields, etcetera, through labor organizations has nothing in common with workers’ control over industry, for in the essence of the matter the management is effected through the labor bureaucracy which is independent of the workers, but in return, completely dependent on the bourgeois state. This measure on the part of the ruling class pursues the aim of disciplining the working class, making it more industrious in the service of the common interests of the state, which appear on the surface to merge with the interests of the working class itself. As a matter of fact, the whole task of the bourgeoisie consists in liquidating the trade unions as organs of the class struggle and substituting in their place the trade union bureaucracy as the organ of the leadership over the workers by the bourgeois state. In these conditions, the task of the revolutionary vanguard is to conduct a struggle for the complete independence of the trade unions and for the introduction of actual workers’ control over the present union bureaucracy, which has been turned into the administration of railways, oil enterprises and so on.”
García Treviño wrote an article quoting (anonymously) passages from Trotsky’s document – including on Bonapartism sui generis and the concluding emphasis on the need for a revolutionary party. He praised the workers’ administration as just as efficient as under the previous management — for example by centralising production — and rejecting the hostility of the Stalinists towards it.
But he pointed out that in the rail industry, workers had also been saddled with the old debts of the company. He criticised the form of control because it could not break out of the laws of the bourgeois economy, the firm was bankrupt and because compensation was paid. He said that although workers had a bigger say in the industries, the state remained in control and pointed out that cooperatives could be a “cruel and merciless” form of exploitation of the working class.
Trotsky was unable to add much over the next year. The world was sucked into another global war and as hostilities began, a huge faction fight took place in the Trotskyist organisation in the United States, the SWP. On top of that, the Stalinists in Mexico stepped up their attacks on Trotsky’s asylum and prepared the ground for the GPU assassins to do their work.
For example PCM leader Laborde accused Trotsky of involvement in a rail crash in its paper La Voz de Mexico in April 1939. Lombardo’s press, including Futuro magazine and the daily paper El Popular slandered him during the early months on 1940. Trotsky again proposed a public commission of investigation of the charges.
On 24 May 1940 a serious attempt was made to murder Trotsky, with the Stalinist painter David Siqueiros leading an armed assault on his house at night.
Accused of slandering the Stalinists, Trotsky offered to take the matter to court. He identified the role of the GPU, which had begun making plans to kill him from April 1939. These plans were stepped up by Vittorio Cordovilla, a Stalinist agent who arrived in Mexico in late 1939 and organised a purge of the party (including its leaders Laborde and Campa) for not prosecuting the anti-Trotsky campaign hard enough. Within months of this intervention, Trotsky’s life was ended by a Stalinist ice axe to the head.
On Trotsky’s desk at the time of his death was an unfinished manuscript from April 1940 on the trade unions, with a valuable assessment of the relationship between the state and the working class in Mexico and similar countries. Entitled Trade Unions in the Epoch of Imperialist Decay, it once more characterised the Cárdenas regime as Bonapartist.
Trotsky also distinguished between different forms of Bonapartism, with some leaning “in a democratic direction, seeking support among workers and peasants”, while others “install a form close to military-police dictatorship”.
He criticised the nationalisation of the railways and oil fields as aimed simultaneously at foreign capital and the workers – and registered that these industries were run by the union bureaucracy for the bourgeois state.
Trotsky also repeated his assessment that the Mexican trade unions had been transformed into semi-state institutions – but maintained that Marxists still had the possibility of working inside them. But he emphasised the need for workers’ organisations to assert their own independent politics, from the state and the labour bureaucracy, and to fight for trade union democracy.
One thing is clear from comparing Mexico in the late 1930s with the situation today (especially in Venezuela), and that is that Mexico’s history anticipated present political issues of strategy and tactics in almost every case — the nationalisations, workers’ participation, coup attempts, union splits, the press, the creation of a ruling party etc, — as part of the creation of a Bonapartist regime. And in almost every case, Trotsky set out a clear position for how Marxists would navigate in these circumstances.
Of course, we cannot read off mechanically from the past what to say and do in the present. For one thing, Venezuela and Mexico today are much more industrially developed than in Trotsky’s time, and the form of domination by the US is different today than it was in the 1930s. And the Venezuelan UNT trade union federation is not today incorporated in the state but is an independent movement with some militant and longstanding rank and file forces.
But our tradition is an anchor – it demands a critical stance. Other Marxists, including Trotskyists in Mexico and elsewhere in Latin America, have used Trotsky’s comments to develop their analysis of the Mexican regime in terms of Bonapartism – and applied to to other cases, such as Peron in Argentina and Velasco in Peru. Events in Venezuela under Chávez should be assessed on their own terms: but much can be learned from the attitude that Trotsky took to comparable developments.
Given the enthusiasm for China demonstrated by sections of the “left” recently, the following article is essential reading:
By Camila Bassi (Workers Liberty)
The Hong Kong based NGO China Labour Bulletin (CLB) was set up in 1994. Its founder, a former railway worker, helped establish – during the 1989 Tiananmen Square revolutionary uprising – the Beijing Workers’ Autonomous Federation. This was China’s first, but short-lived, independent trade union. In March this year CLB produced a report assessing the development of the workers’ movement in China during the first decade of the twenty-first century. This article summarises the appraisal made in this report .
Han Dongfang, founder of the CLB, speaking in Tiananmen Square 1989 as a representative of China’s first and short-lived independent trade union.
The phenomenal rate of growth in China’s economy (an economy which surpassed Japan in 2011 to become the second largest in the world) was, by and large, on the sweat and toil of an apparently unlimited supply of impoverished labour from the rural hinterland to the southern coastal areas. As this growth rate slowed, China witnessed a rise in working class organisation, strike action and protest.
The restructuring of state-owned enterprises (SOEs) during the late 1990s and early 2000s and the rapid proliferation of private enterprises has shaped the workers’ movement in two key ways. On the one hand, the previous guarantee of an ‘iron rice bowl’ existence (a job, a home and welfare benefits) disappeared. While workers became unemployed, they observed their former bosses making money out of corrupt manipulation of the restructuring process (with, for instance, state assets being purchased at ludicrously low prices). One major focus of workers’ protest in the early millennium then was over the restructuring process, specifically, redundancy payments, job relocations and corruption. The Liaoyang mass protest of 2002-2003, which involved up to 10,000 workers, is perhaps the most notable. On the other hand, the early rampant growth of private enterprise signified the muscular dominance of capital over labour, with large-scale migration of rural residents to China’s cities for work. A critical shift in demographics however has conditioned the nature of these workers’ protests. The Western media has notably referred to China’s ‘demographic timebomb’, as The Guardian reported this year:
Life expectancy has soared in China, while fertility has plummeted due to strict birth control policies. In 2009 there were 167 million over-60s, about an eighth of the population. By 2050 there will be 480 million, while the number of young people will have fallen. […] China’s economic miracle has been fuelled by its “demographic dividend”: an unusually high proportion of working age citizens. That population bulge is becoming a problem as it ages. In 2000 there were six workers for every over-60. By 2030, there will be barely two.
Labour shortages, first apparent in 2004, then easing during the 2008-2009 capitalist crisis, were, by the end of the decade, evident across China. Since 2004, not only have the number of workers’ protests increased but so too have their demands evolved – from reactive, for example, against violations of labour rights, to proactive, such as demands for better wages and working conditions.
In terms of the distribution of workers’ struggle across the different sectors of China’s economy, while, in the early 2000s, the concentration was in the manufacturing sector (at a time when growth was fuelled by export-led manufacturing delivered by low cost labour), also, during the decade, significant protests took place in the education and transport sectors. Take the case of community teachers, who had played a crucial role since the 1960s in China’s localised schooling but were, in their millions, laid off in the early millennium. Throughout the decade, community teachers have petitioned government and protested. Moreover, regular teachers, particularly in the poorer provinces of Sichuan, Shaanxi, Chongqing, Hubai and Hunan, have struck for pay parity with civil servants.
CLB observe a range of tactics used by the labour movement, from strikes (which are still the tactic of choice) to other creative actions. One interesting example is from June 2010, as it reports:
Workers at Jalon Electronics in Xiamen staged a mass “sleep-in” to protest against new work quotas introduced after a 1 June pay increase. Workers said pay for an eight-hour shift had gone up from 30 yuan to 38 yuan but that the work quota had gone up from an already difficult 7,700 units of conductive adhesive to an impossible 9,000 units. The workload was so exhausting that workers said they had no option but to sleep at their stations.
In the context of an intensifying and politically more militarised workers’ movement, the Chinese Communist Party (CCP) has attempted to marry a so-called new Confucianism with capitalism. The result? The promotion of a ‘harmonious society’; this, in reality, has entailed only piecemeal reforms, such as lacklustre reform of the Hukou (household registration system), which fail in seriously addressing the exclusion of rural migrants and the exploitation of workers. That said, this does point to a serious anxiety of the CCP, as CLB notes: central government spending on the maintenance of stability reached 514 billion yuan in 2009, roughly equivalent to or even in excess of the country’s annual expenditure on the military.
Nonetheless, workers’ protests have continued to excavate, many centred on “anger at the rapidly increasing gaps between the rich and the poor and the powerful and the weak, processes seen as directly linked to government corruption and cronyism.” Furthermore, the blackout in China’s official media on workers’ strikes and demonstrations is no longer possible, because of the rapid spread of the country’s social media, which includes, it is estimated, over 500 million netizens.
Whilst worker protests in the early 2000s predominantly involved laid-off workers from SOEs and rural migrants employed in the private sector, by the end of the decade a new group, or a ‘new generation’, emerged. Those born in the 1980s and 1990s have altered the nature of the migrant worker to one younger, better educated, more connected, and with higher expectations and more willingness to take on proactive demands. This, along with the ‘demographic timebomb’, CLB concludes, means that the workers’ movement in China (although still transitory and fragmented) is politically advancing. In a country hosting one in five of the world’s population, a cause for hope and solidarity then.
China Strikes, here:
“How do you wrestle with your conscience when the injustice you have perpetuated has destroyed the lives of children and left thousands of thalidomide victims still enduring pain and suffering, without adequate compensation?” – Sir Harold Evans, former Sunday Times editor, in today’s Observer.
After fifty years, Grünenthal, the company responsible for Thalidomide and the deformity and ruined lives of an estimated 10,000-to-20,000 children, has finally issued an apology. Of sorts.
The company has unveiled a statue and released a statement saying that it “regrets” the deformities and agony caused to babies born to mothers who took Thalidomide as a supposed treatment for morning sickness and other prgnancy-related difficulties, in the late 1950′s and early ’60′s.
But the company has not increased the meagre compensation it reluctantly provided to victims in 1968, nor admitted to the scandalous extent of its profit-driven criminal negligence when it released the drug in the ’50′s, without proper testing and with fraudulent claims about its safety. Exactly how much Grünenthal knew about the risks at the time of the drug’s launch is not clear: but for sure, they ignored early evidence of the terrible side-effects (including the wife of one of its own employees, who used Thalidomide and gave birth to a baby without ears before the drug was put on the market).
In Britain, the Distillers Company (now part of Diageo) distributed the drug with the approval of the Ministry of Health (then on very good terms with Distillers) until, eventually, the scandal was exposed by the Sunday Times. It was a dark chapter in the history of medicine but a fine example of courageous, campaigning journalism. The Sunday Times had to take on not just Distillers, but the legal establishment and the Tory government of the day. The attorney-general, backed by the House of Lords obtained an injunction preventing publication of the paper’s devastating findings, and the paper had to spend millions of pounds fighting for the right to publish. Eventually, thanks to the tenacity of then-editor Harold Evans and the paper’s proprietors, the truth came out, the drug was withdrawn and a compensation settlement of £28m was reached with the UK victims.
But the compensation in the UK and world-wide, remains thoroughly inadequate and the battle for justice for all the victims, continues. As Evans notes in his Observer piece:
“[D]ecency requires me to identify some heroes in the struggle for justice – the thalidomide victims, now in middle age, who continue to fight for others: Freddie Astbury, president of Thalidomide UK, who describes the CG apology without compensation as a disgrace; the Lords Jack Ashley and Alf Morris, who fought so hard for the victims in their lifetimes, and Labour’s minister of health, Mike O’Brien.”
I will leave to one side, for now, why it is that Evans is writing in the Observer rather than the paper he edited at the time of the scandal and which played such an honourable role back then, the Sunday Times…
From the New Yorker blog:
Ayn Rand Joins the Ticket
Two years later, in 2005, Ryan paid fealty to Rand in a speech he gave to the Atlas Society, the Washington-based think tank devoted to keeping Rand’s “objectivist” philosophy alive. He credited her with inspiring his interest in public service, saying, “[T]he reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand. And the fight we are in here, make no mistake about it, is a fight of individualism versus collectivism.” (One of the trustees of the Atlas Society, Clifford Asness, the co-founder of AQR Capital Management, a twenty-billion-dollar hedge fund, is one of the many outspoken Wall Street financiers who has shifted political sides, denouncing Obama, who he supported in 2008, for interfering with capitalism by bailing out Chrysler, and by imposing tighter financial regulations after the 2008 economic collapse).
Three years ago, as Tim Mak reports today at Politico, Ryan described America’s political challenge as coming straight out of Rand’s work—saying, “what’s unique about what’s happening today in government, in the world, in America, is that it’s as if we’re living in an Ayn Rand novel right now. I think Ayn Rand did the best job of anybody to build a moral case of capitalism, and that morality of capitalism is under assault.”
More recently, however, Ryan distanced himself from Rand, whose atheism is something of a philosophical wedge issue on the right, dividing religious conservatives from free-market libertarians. This year, with his political profile rising, Ryan stressed not only that he had differences with Rand’s atheism—a point he had made as far back as 2003—but went so far as to denounce her whole system of beliefs, describing his early attraction to her writing as little more than a youthful dalliance. He admitted that he had “enjoyed her novels,” but, as Mak notes, he stressed that, “I reject her philosophy. It’s an atheist philosophy. It reduces human interactions down to mere contracts and it is antithetical to my worldview. If somebody is going to try to paste a person’s view on epistemology to me, then give me Thomas Aquinas.”
Ryan’s sidestep from Rand was politically essential. As a Mormon, the last thing Romney needs is to alienate the Christian Right further by putting an acolyte of an atheist on the ticket. So it was not surprising that Romney made a point of stressing Ryan’s Catholicism during his announcement of Ryan today, introducing him as, “A faithful Catholic” who “believes in the dignity and worth of every life.”
While Ryan may be distancing himself from Rand now, the Democrats will surely argue that her views on the virtues of selfishness have left a more lasting legacy in the policies that he and Romney embrace. In his début today, Ryan stressed that “We promise equal opportunity—not equal outcomes”—a philosophy that telegraphed a tough message to those who are worst off. Ryan also signalled a Rand-like celebration of the winners, and dismissed complaints from the losers, saying, “We look at one another’s success with pride, not resentment.” Rand’s language was tougher still. She used words such as “refuse” and “parasites” to describe the poor, while celebrating millionaire businessmen as heroes. She abhorred government social programs, such as Social Security, at least until she reached the age of eligibility, and reportedly signed on for both its benefits and those of Medicare.
Ryan wont be the first Rand fan to grace the Vice-Presidential ticket. Jack Kemp, who was Ryan’s mentor in politics, also described himself as influenced by her writing. In some ways, the Romney-Ryan ticket resembles the Dole-Kemp one, in pairing a Presidential candidate short on charisma and conservative credentials with a younger, more ideologically fiery sidekick. Kemp, however, was famously optimistic in his outlook. Ryan has a sterner countenance. Either way, though, while the G.O.P. may be behind when it comes to attracting female voters, in picking Ryan, who like Kemp was deeply influenced by Rand, it has added at least the imprint of an extra woman to the ticket.
For more on Romney, Ryan, and the rest of the campaign, bookmark The Political Scene, our hub for coverage of the 2012 election.
Photograph by Brendan Hoffman/Getty
Paul Ryan, conspiracy theorist, climate denier
H-t: Alan T
Above: “ugly, insecure and grotesque”
Marx and Engels gave a materialist explanation of the origin of the aesthetic sense itself. They noted that man’s artistic abilities, his capacity for perceiving the world aesthetically, for comprehending its beauty and for creating works of art appeared as a result of the long development of human society and were the product of man’s labour. As early as in his Economic and Philosophic Manuscripts of 1844, Marx pointed to the role of labour in the development of man’s capacity to perceive and reproduce the beautiful and to form objects also “in accordance with the laws of beauty” (Marx and Engels, Collected Works, Vol. 3, Moscow, 1975, p. 277).
This idea was later developed by Engels in his work Dialectics of Nature, in which he noted that efforts of toil “have given the human hand the high degree of perfection required to conjure into being the pictures of a Raphael, the statues of a Thorwaldsen, the music of a Paganini” (see pp. 128-29 of this book). Thus both Marx and Engels emphasise that man’s aesthetic sense is not an inborn, but a socially-acquired quality.
The founders of Marxism extended their dialectical view of the nature of human thought to analysis of artistic creativity. In examining the development of art together with that of the material world and the history of society, they noted that the content and forms of art were not established firmly once and for all, but that they inevitably developed and changed according to definite laws along with the development of the material world and of human society. Each historical period has inherent aesthetic ideals and produces works of art corresponding to its particular character and unrepeatable under other conditions. Comparing, for example, the works of Raphael, Leonardo da Vinci and Titian, Marx and Engels emphasised that “Raphael’s works of art depended on the flourishing of Rome at that time, which occurred under Florentine influence, while the works of Leonardo depended on the state of things in Florence, and the works of Titian, at a later period, depended on the totally different development of Venice” (p. 177).
The problem with the Shard is that it is ugly, insecure and grotesque.
The ‘lets build the tallest building’ game is best left to children and the insecure. Dubai is obsessed with having the tallest building because it is not a place which really exists. It is a city literally built on sand, like some wrongheaded parable. It has a great deal to prove. Sydney throws up skyscrapers despite the plentiful space available because Australia is so deeply insecure about its importance. London never needed to. Confident cities build low because they have nothing to prove. And there is no use saying, as Ken Livingstone did on the Today programme this morning, that we have run out of space and need to build up. The building is empty. There is no demand for what it is offering -Ian Dunt
P.S (from JD): I like handsome, well-designed skyscrapers, including some of Piano’s previous work.
I’m worried about Bob Diamond.
Barclays‘ new boss first came to my attention in January when he told MPs that the “period of remorse and apology for banks … needs to be over”. I didn’t like that, partly because I hadn’t really noticed any period of remorse and apology, unless you count “I’m sorry our various scams didn’t work” as an apology; and partly because it’s not for him to say. If you’re really sorry for something, you should just keep being sorry. It’s for others to decide when you can be let off the hook. If you’re the first to be asking whether you’ve apologised enough, then you haven’t - David Mitchell, The Observer, 18 Dec 2011
From the FSA:
Barclays fined £59.5 million for significant failings in relation to LIBOR and EURIBOR
27 Jun 2012
The Financial Services Authority (FSA) has today fined Barclays Bank Plc (Barclays) £59.5 million for misconduct relating to the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR). This is the largest fine ever imposed by the FSA.
Barclays’ breaches of the FSA’s requirements encompassed a number of issues, involved a significant number of employees and occurred over a number of years. Barclays’ misconduct included:
- making submissions which formed part of the LIBOR and EURIBOR setting process that took into account requests from Barclays’ interest rate derivatives traders. These traders were motivated by profit and sought to benefit Barclays’ trading positions;
- seeking to influence the EURIBOR submissions of other banks contributing to the rate setting process; and
- reducing its LIBOR submissions during the financial crisis as a result of senior management’s concerns over negative media comment.
In addition, Barclays failed to have adequate systems and controls in place relating to its LIBOR and EURIBOR submissions processes until June 2010 and failed to review its systems and controls at a number of appropriate points.
Barclays also failed to deal with issues relating to its LIBOR submissions when these were escalated to Barclays’ Investment Banking compliance function in 2007 and 2008.
Tracey McDermott, acting director of enforcement and financial crime, said:
“Barclays’ misconduct was serious, widespread and extended over a number of years. The integrity of benchmark reference rates such as LIBOR and EURIBOR is of fundamental importance to both UK and international financial markets. Firms making submissions must not use those submissions as tools to promote their own interests.”
“Making submissions to try to benefit trading positions is wholly unacceptable. This was possible because Barclays failed to ensure it had proper controls in place. Barclays’ behaviour threatened the integrity of the rates with the risk of serious harm to other market participants.”
“The FSA continues to pursue a number of other significant cross-border investigations in this area and the action we have taken against Barclays should leave firms in no doubt about the serious consequences of this type of failure.”
The BBA is currently undertaking a review of the way LIBOR is set and will publish its findings shortly. The FSA, along with the other tripartite authorities, is working to support market-led reviews of existing arrangements, with the goal of ensuring such arrangements continue to command the confidence of all stakeholders.
Barclays co-operated fully during the FSA’s investigation and agreed to settle at an early stage. The firm qualified for a 30% discount under the FSA’s settlement discount scheme. Without the discount the fine would have been £85 million.
This was a significant cross-border investigation and the FSA would like to thank the U.S. Commodity Futures Trading Commission (CFTC), the U.S. Department of Justice (DoJ) (together with the Federal Bureau of Investigation (FBI)) and the Securities and Exchange Commission (SEC) for their co-operation.
The CFTC brought attempted manipulation and false reporting charges against Barclays for similar failings, which the bank agreed to settle. The CFTC imposed a penalty of US$200 million. In addition, as part of an agreement with the DOJ, Barclays admitted to its misconduct and agreed to pay a penalty of US$160 million.
Notes for editors
- The Final Notice for Barclays Bank Plc.
- LIBOR and the EURIBOR are benchmark reference rates that indicate the interest rate that banks charge when lending to each other. They are fundamental to the operation of both UK and international financial markets, including markets in interest rate derivatives contracts.
- LIBOR and EURIBOR are used to determine payments made under both over the counter (OTC) interest rate derivatives contracts and exchange traded interest rate contracts by a wide range of counterparties including small businesses, large financial institutions and public authorities. Benchmark reference rates such as LIBOR and EURIBOR also affect payments made under a wide range of other contracts including loans and mortgages. The integrity of benchmark reference rates such as LIBOR and EURIBOR is therefore of fundamental importance to both UK and international financial markets.
- LIBOR is published on behalf of the British Bankers’ Association (BBA) and EURIBOR is published on behalf of the European Banking Federation (EBF). LIBOR and EURIBOR are calculated as averages from submissions made by a number of banks selected by the BBA or EBF. There are different panels of banks that contribute submissions for each currency in which LIBOR is published, and for EURIBOR.
- LIBOR and EURIBOR are by far the most prevalent benchmark reference rates used in euro, US dollar and sterling OTC interest rate derivatives contracts and exchange traded interest rate contracts. The notional amount outstanding of OTC interest rate derivatives contracts in the first half of 2011 has been estimated at 554 trillion US dollars. The total value of volume of short term interest rate contracts traded on LIFFE in London in 2011 was 477 trillion euro including over 241 trillion euro relating to the three month EURIBOR futures contract (the fourth largest interest rate futures contract by volume in the world).
- Until February 2011 the US dollar LIBOR panel consisted of 16 banks and the rate calculation for each maturity excluded the highest four and lowest four submissions. An average of the remaining eight submissions was taken to produce the final published LIBOR.
- Throughout the Relevant Period, the EURIBOR panel consisted of at least 40 banks and in each maturity the rate calculation excluded the highest 15% and lowest 15% of all the submissions collated. A rounded average of the remaining submissions was taken to produce the final published EURIBOR.
- The FSA Enforcement Conference 2012 – ‘Credible deterrence: Here to stay’ takes place on Monday, 2 July, 2012.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
- The FSA will be replaced by the Financial Conduct Authority and Prudential Regulation Authority in 2013. The Financial Services Bill currently undergoing parliamentary scrutiny is expected to receive Royal Assent by the end of 2012
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