Georgia’s PM warns of WW3, as political tensions grip country
Andrea Peters, WSWS, Mar 22 2023
Georgian Prime Minister Irakli Garibashvili
Political tensions continue to roil the country of Georgia, where the government was recently forced to withdraw a law that would have required organizations and media outlets receiving 20% or more of their financing from abroad to declare themselves “foreign agents.” The bill provoked mass protests in the nation’s capital city, Tbilisi, where demonstrators carrying Ukrainian and EU flags demanded the legislation be withdrawn. They denounced the administration of Georgian Prime Minister Irakli Garibashvili for being pro-Russian and aping the government of Vladimir Putin, which has imposed similar laws. On Tuesday, Garibashvili warned that the war in nearby Ukraine is on the verge of becoming a global conflagration and raised questions about his government’s ability to “maintain peace, stability.” Garibashvili said:
Today the world is facing the threat of WW3. This estimate is not exaggerated, it is not speculation. We are witnessing further confrontation, tension and escalation every day.
His “main concern,” he added, is to “save the country.” Georgia, a tiny nation with a population of just 10.8 million located in the south Caucasus, has long been the object of imperialist meddling, with the US and the EU today seeing it as critical to destabilizing Russia. Moscow, which waged brutal wars in the 1990s and 2000s to reassert federal control over the Russian region of Chechnya just to Georgia’s north, is well aware of the dangers posed to it by the ongoing efforts of Washington and Brussels to bring Tbilisi firmly under their domination. The current Georgian government, while maintaining close ties with NATO and seeking EU membership, refused to completely sever relations with Russia after the latter’s invasion of Ukraine. It also has not signed onto the full raft of international sanctions imposed on its giant neighbor to the north and east. Georgia continues to allow Russians visa-free entry into the country. The government in Tbilisi recently floated the possibility of resuming direct flights to major Russian cities. The proposition provoked sharp condemnations from Washington, which has managed to almost entirely seal off Russia’s western border.
While there is widespread hostility to the deeply antidemocratic character of the “foreign agents” law that Garibashvili’s government sought to impose, the demonstrations that took place in Georgia in early March were not simply a spontaneous expression of popular outrage, but a politically orchestrated challenge led by the pro-US, right-wing United National Movement (UNM) to Tbilisi’s somewhat more moderated approach to Russia. The UNM has called for another antigovernment demonstration on April 9. The choice of date is carefully timed, as it is the 34-year anniversary of the Soviet government’s use of force to crush pro-independence demonstrations in Georgia. Twenty-one people died and dozens more were injured on that date. The more decisively pro-Western wing within the Georgian ruling elite is clearly trying to use the commemoration of the event, which is now observed as a national holiday, to stoke anti-Russian sentiment. Yesterday, speaking at a press conference held with his Armenian counterpart, Russian Foreign Minister Sergei Lavrov accused the West of trying to alienate Russia from its neighbors and foment another “color revolution” in Georgia with the aid of “nongovernmental organizations.”
In 2003, the so-called “Rose Revolution” saw the ouster of a Russian-allied government in Georgia in favor of one led by Mikheil Saakashvili, who can only be described as an American stooge. He was himself later driven from power due to corruption, brutality, and the imposition of policies that led to the impoverishment of the population. While Lavrov’s denunciations of Western meddling are not driven by the slightest concern for the rights of ordinary people in Georgia, the US has indeed been funneling hundreds of millions of dollars to various “civil society organizations” in the small Black Sea nation. USAID, just one of dozens of governmental and nongovernment agencies that orchestrate American policy overseas, proudly declares on its website:
USAID began operating in Georgia in 1992. For 27 years, the American people have provided over $1.8b in assistance to Georgia through USAID. Building on this successful partnership, the US Government dedicates approximately $40m annually to 50 wide-reaching programs that support Georgia’s democratic, free-market, Western orientation.
Obviously, USAID has not been handing over boatloads of money to various “partners” in Georgia for nearly thirty years out of selfless magnanimity. In the aftermath of the withdrawal of the “foreign agents” law by the Georgian government on Mar 10, the EU and the US have simultaneously sought to increase pressure on Tbilisi and shore up relations with it. For its part, the Georgian government is clearly flailing about trying to, on the one hand, appease Western powers and, on the other, avoid being crushed by the US-NATO war drive against Russia.
On Mar 17, British Foreign Secretary James Cleverly held a press conference with his Georgian counterpart in which he insisted that relations between the two countries were vital to security, firm and steadfast. In an obvious reference to Russian influence in Georgia, Britain, he claimed, seeks to strengthen Georgian democracy against “those who seek to undermine it.” Just a few days later, Georgia held meetings with representatives from Brussels about the south Caucasian country’s ongoing bid to become a member of the EU, which it formally initiated last year. The EU recently issued a series of conditions that Georgia must meet in order to gain admittance. All of them, on the alleged basis of “ending corruption,” “promoting democracy,” and “deoligarchizing,” involve imposing one or another right-wing economic reform, bringing Georgia’s political and legal system more firmly under the control of Brussels, or pushing out Russian-allied oligarchs in Georgia in favor of European-allied ones. Parallel to these negotiations are ongoing discussions regarding military and security ties between the EU and Georgia, which sits along a portion of the Black Sea’s eastern coast.
Washington, which cheered the antigovernment demonstrations in Georgia in early March, is playing the “human rights” card in its effort to exert pressure on the Garibashvili administration. On Mar 20, the US Dept of State released a report identifying “serious problems” with Georgia’s judiciary and approach towards freedom of the press. Prime Minister Garibashvili dismissed the allegations as “speculations and conclusions and reports based on false, fabricated information provided by politically engaged, biased individuals.” In recent weeks, other politicians from the ruling Georgian Dream party have raised the prospect of the overthrow of the sitting government. On Mar 17, the mayor of Tbilisi and a leading figure in the organization, Kakha Kaladze, accused the former United National Movement Interior Minister Vano Merabishvili and UNM Chair Levan Khabeishvili of seeking to stage “a confrontation, a revolution, a coup.” The People’s Power party, which is made up of former members of the Georgian Dream party, also released a statement last week describing the protests in early March as being “in the interests of other countries” and intended to drag Georgia “onto the path of war.”
US treasury secretary Yellen pledges more money for the ultra-wealthy if needed
Nick Beams, WSWS, Mar 21 2023
Yellen speaks during a press conference at a G20 meeting in Venice.
US treasury secretary Janet Yellen has given an assurance to wealthy individuals and investors that the government will step in to ensure their holdings of uninsured deposits, sometimes running into tens of millions of dollars, are guaranteed. Her remarks, in a speech to the American Bankers Association yesterday, were the most explicit to date that the bailout of uninsured depositors with the failed Silicon Valley Bank and Signature Bank were not a one off but would be extended if that were considered necessary. Yellen said:
The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was to protect the broader US banking system. And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.
The remarks were welcomed on Wall Street as bank stocks rose, with analysts commenting they had reassured investors. Yellen said the situation was stabilising, the US banking system remained sound and told the bankers at the meeting:
You should rest assured that we will remain vigilant.
She passed over in silence the question of why “vigilant” authorities completely failed to see the SVB crisis coming or, before that, the Ponzi scheme operation, largely carried out in plain sight, of Sam Bankman-Fried’s failed crypto firm FTX, the demise of which led to the failure of the crypto-connected Silvergate bank just two weeks ago. Turning to the broader implications of the SVB failure and the growing concerns that nothing has been resolved since the global financial crisis of 2008, Yellen said the current turmoil was very different. She said:
Back then many financial institutions came under stress due to their holdings of subprime assets. We do not see that situation in the banking system today.
But that is precisely what makes this crisis far more serious in its implications than that of 2008. It has arisen from the holdings by banks of vast quantities of Treasury bonds and mortgage-backed securities, supposedly the safest assets in the world, and is a product of the response of the government and the Federal Reserve to the meltdown of 15 years ago. Quantitative easing, under which around $9 trillion was pumped into the financial system by the Fed, resulted in the build-up on the balance sheets of banks of large amounts of supposedly “safe” securities. But the Fed’s interest rate hikes, initiated in the past year in an effort to crush the wages upsurge of the working class, have now produced a sharp fall in the market value of these assets to below their book value, leading to the realisation of significant losses when they have to be sold to meet the cash demand of depositors. However, according to Yellen:
Our financial system is significantly stronger than it was 15 years ago. This is in large part due to post-crisis reforms that provided stronger capital standards, among other important improvements.
This only raises the question, if that is really the case, then why did the Fed and the Federal Deposit Insurance Corporation insist their actions in bailing out wealthy depositors at SVB and Signature were necessary to prevent a “systemic crisis,” that is, one which hits the entire system, including the stronger major banks? At first sight it may appear that there are two opposed explanations. Either the invocation of a “systemic crisis” was merely a cover for bailing out the wealthy, even though the banking system was strong or, there was the prospect of a genuine crisis which means that all the supposed “reforms” of the past 15 years have come to nothing. Actually, both processes are involved. The authorities do face a “systemic crisis” but providing a stop-gap solution means handing over still more money to the ultra-wealthy.
Such is the fragility of the financial system that the operations of the “free market” through which failed investments are purged cannot continue to function, because any problem threatens to set off a collapse requiring the intervention of the state and its agencies using their capacity to create money. The logic of this process is that money will continue to be poured in until it produces a crisis of state and central bank financing. The conditions which led to the failure of SVB, the fall in the value of the Treasury bonds it held, are developing in other interest-rate sensitive areas of the economy. Yesterday, the chief executive of JPMorgan Asset Management, Georg Gatch, warned that commercial real estate could be the next shoe to drop as a result of interest rate hikes by the Fed. He said in comments reported by the Financial Times:
The failure of SVB and the emergency takeover of Credit Suisse highlight the stress of rising interest rates. Investors are wondering what is the next impact? Commercial real estate is an area of concern. We have higher interest rates for property developers, how does that impact the real estate markets and lenders in that space.
The FT also reported on a note issued by Goldman Sachs which said the real estate sector was dealing with a “challenging” environment. It said:
The recent stress in the banking sector has fuelled growing concern about spillover effects on the commercial real estate industry. With over half of the $5.6t of outstanding commercial loans sitting on bank balance sheets, bank lending remains the primary source of funding for this sector. This is particularly the case for small banks which capture the lion’s share of lending.
Meanwhile there are deepening concerns about the flow-on effects of the takeover of Credit Suisse in which the Swiss government reduced the value of higher risk AT1 bonds overnight to zero. It overturned the previous practice in which such bonds were placed higher than shares when it came to salvaging what remained of a failed entity. The $250b market in such bonds, which are widely used, is in turmoil as investors ponder what rules, if any, now apply. Legal challenges may be mounted. Natasha Harrison of the law firm Pallas, which is preparing possible legal action, told the WSJ:
What investors look at when they are investing is certainty of process and the rule of law. That has just been swiped away in one fell swoop by Switzerland.
In a research note, analysts at JPMorgan said the Swiss decision could lead to “contagion for wholesale funding costs across the sector” with the interest rates being demanded on AT1 bonds possibly running into double digits. Summing up the interaction between the deepening crisis and actions of financial authorities, another article in the WSJ noted:
Officials the world over justify such ad-hoc interventions by citing the need to stabilise, reassure or calm markets. But they often do the opposite. The SVB and Signature actions set in motion the jitters that brought down Credit Suisse, and now the emergency Credit Suisse fix is roiling the bond market.
This observation could be extended. The emergency actions taken by the Fed in 2008 and again in Mar 2020 to prop up the banks, speculators, the stock market and the financial system have now created the conditions for an even deeper crisis, which, like that of 2008, will bring ever deeper attacks on workers and their families as the ruling elites, bailed out by the state, seek to make them pay for it.
Top US official visits New Zealand to strengthen ties against China
Tom Peters, WSWS, Mar 22 2023
Kurt Campbell, national security coordinator in the Biden administration.
Last weekend Kurt Campbell, national security coordinator in the Biden administration, visited New Zealand in a delegation that included US State and Defence Dept officials and Coast Guard representatives. It was the first stop in a Pacific tour that has continued this week with visits to the Cook Islands, Papua New Guinea, Fiji, Vanuatu and the Solomon Islands. Campbell met with New Zealand Defence Minister Andrew Little as part of the push to integrate the country more fully into the far-advanced US preparations for war against China. Driven by the worsening global economic crisis, US imperialism is rushing headlong into a war to redivide the world at the expense of both Russia and China. Senior US general Mike Minihan recently stated that he believes war with China is likely within two years. The NZ visit followed a meeting in San Diego between Biden and the Australian and UK prime ministers Anthony Albanese and Rishi Sunak, which confirmed that Australia will be supplied with nuclear-powered attack submarines as part of the anti-China AUKUS military pact. This has been accompanied by a militarist propaganda campaign from the Albanese government and the Australian media, with major newspapers calling for the reintroduction of conscription and even for Australia to acquire nuclear weapons.
The US is clearly concerned that New Zealand, a partner in the US-led Five Eyes intelligence sharing network, has sought to distance itself from the more belligerent anti-China rhetoric. The previous National Party government and the current Labour-Greens government have expanded the economic relationship with China, the largest market for New Zealand exports, while also strengthening military ties with the US. Wellington has sent troops to Iraq and Afghanistan, and is providing funding and training to Ukrainian forces for the US-NATO proxy war against Russia. Campbell told journalists in Wellington that the US was responding to “an urgent set of security challenges in the Indo-Pacific, and like-minded countries are rallying independently to those challenges.” He called for increased cooperation with New Zealand, saying without going into any detail:
We will be announcing soon that we want to launch a bilateral engagement between the United States and New Zealand on technology.
Campbell said there was “deep discussion” with New Zealand about increasing US engagement in the Pacific region and that NZ could be involved in AUKUS. Again he did not elaborate on what this would look like. Clearly concerned to avoid antagonising China, New Zealand Prime Minister Chris Hipkins played down the significance of the talks. Asked what sort of involvement New Zealand could have in AUKUS, he told the media yesterday:
I don’t want to speculate on that while we’re continuing to have conversations. New Zealand’s nuclear-free legislation was a pretty big stumbling block to us being involved in AUKUS as it’s currently framed.
The legislation, introduced by the 1980s Labour government, prohibits the entry of nuclear-powered vessels into New Zealand waters. In fact, the nuclear-free policy was significantly undermined in 2016 when the then-National Party government invited a US navy warship to visit New Zealand for the first time in decades. The decision was supported by Labour and the Greens. The US military has a policy of not revealing whether its ships or aircraft are nuclear-armed. Moreover, as a member of the Five Eyes, New Zealand’s Waihopai spy base is integrated into US-led operations against China. Whistleblower Edward Snowden revealed that NZ’s Government Communications Security Bureau spies on China and other Asia-Pacific countries, feeding the intelligence to the US National Security Agency. New Zealand’s role in this military-intelligence network means that it would be involved from the outset in any war between the US-Australia and China.
Hipkins’ reluctance to fully embrace AUKUS, for now, points to nervousness in ruling circles about the implications of the US confrontation with China. Wellington’s fraught balancing act is highlighted by the fact that, after Campbell’s visit, NZ foreign minister Nanaia Mahuta departed on a visit to Beijing, where she met her counterpart, Qin Gang, to discuss stronger trade ties. The visit coincided with President Xi Jinping’s meeting with Russia’s Vladimir Putin to propose peace talks to end the conflict in Ukraine, something Washington vehemently opposes. The accelerating charge towards war has revealed divisions in New Zealand’s ruling elite. Sections of the media, including the nominally liberal Daily Blog and pro-US commentators such as Anne-Marie Brady, are pushing for a much firmer anti-China stance.
On the other hand, a worried New Zealand Herald editorial on March 18 said former Australian prime minister Paul Keating had made “valid points” in his criticism of AUKUS. Speaking on behalf of a minority faction of the Australian bourgeoisie, Keating raised concerns about the cost to Australian capitalism of joining a full-blown war against China. The Herald noted the “lack of public say” over the details of AUKUS and questioned “whether it is strategically smart or good value,” adding that “defence is gobbling up billions that could be spent on climate change.” It said the deal “increases the chances of Australia being a substantial player in any US conflict with China. Were Australia to be a major target, New Zealand would be affected.” Concerns were also raised by former Green MP Gareth Hughes, who wrote in Stuff that nuclear war was now “terrifyingly possible in the next few years” and that New Zealand would be “required by treaty obligations to act” if Australia is attacked. Hughes said New Zealand should take an “independent” stance, “focused on reducing tensions, finding solutions and building trust. War is never inevitable.” As a model, he pointed to the role played by Helen Clark’s Labour government during the brutal US war against Iraq. According to Hughes:
Twenty years ago New Zealand displayed its independent foreign policy by refusing to be railroaded into Bush’s ‘coalition of the willing,’ despite opposition from the National Party at the time.
This is a falsification of history. In fact, the Labour Party government sent dozens of army engineers to Iraq in 2003, after having already participated in the illegal invasion and occupation of Afghanistan, with the support of the pseudo-left Alliance. US embassy cables later released by WikiLeaks confirmed that the Clark government joined the Iraq war for commercial reasons, including to protect NZ dairy giant Fonterra’s contract to supply Iraq. Hughes’ praise for the Clark government speaks to the fact that there is no anti-war faction in the political establishment. New Zealand is a minor imperialist power, and since WW2 its ruling class has maintained a close alliance with the US and Australia in order to defend its own interests in the Pacific region and more broadly. The Green Party, as part of the present Labour-led government, has supported major increases in military spending, including new aircraft and navy vessels, aimed at boosting New Zealand’s interoperability with the US and other allies in preparation for war.
Along with the entire parliament and media establishment, the Greens support the escalating war against Russia, which is conceived of in Washington as a step towards war with China. There is widespread opposition to war, as there was 20 years ago, when tens of millions of people joined protests throughout the world against the invasion of Iraq. But the failure of that movement to stop the invasion proves that war cannot be opposed through appeals to any faction of the capitalist class and its political parties, including Labour and its allies. A genuine anti-war movement can only be built on the basis of socialist and internationalist principles. The working class must be united across borders in a movement to abolish the source of war: the capitalist system and its division of the world into rival nation-states. We urge readers in New Zealand to attend the meeting on Apr 4, hosted by the International Youth and Students for Social Equality at Victoria University of Wellington, “The War in Ukraine and How to Stop It,” to discuss these burning questions.
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