On 28 December, the first sparks of a movement which brought to mind the “Arab Spring” of a few years ago began to shake the territory of Iran. The movement seems for the moment to have run out of steam as we write, although we are seeing other expressions of anger against the deterioration of living standards, such as in Morocco, Sudan and above all Tunisia.
A spontaneous explosion of anger
Iran is a country with powerful imperialist ambitions, where military expenses devoted to intervention throughout the Middle East have risen sharply. Although Iran is still suffering from the sanctions imposed by the USA, it has spent huge amounts of money in the war in Yemen, in supporting Hezbollah and the Assad regime, and its own armed gangs operating at the international level. And it has built up its stock of arms against Saudi Arabia. All this has meant austerity for the population. In a context marked by disappointed hopes in the wake of the deal over nuclear weapons agreed with the Obama administration, the economic crisis, aggravated by the international sanctions and the corruption of the regime, has plunged the majority of the population into poverty and uncertainty. For months now there have been demonstrations of discontent by pensioners, the unemployed (28% of young people are out of work), teachers, workers whose wages aren’t being paid. Finally, the 50% rise in oil and basic foods, like the doubling of the price of eggs - there has been talk of a “revolution of the eggs” – lit the fuse. The movement erupted in Mashhad, the second biggest city, in the north east, and quickly spread to the capital Tehran and all the main urban centres: north to Rasht and south towards Chabahar. In all the crowds openly rejecting the policies of the state, the working class was present, even if somewhat diluted in the rest of the demonstrators: factory workers, teachers, many unemployed especially young people: they were all there. Also many students. It is also significant that a large number of the demonstrators were women.
At the same time, despite the courage and fighting spirit of the protesters, the working class was not able to provide a real orientation to this struggle, was not able to affirm itself as an autonomous political force. And this was the case even if a minority among the students, notably in Tehran, came out against the reactionary nationalist slogan “neither Gaza or Lebanon, I will only die for Iran” with an expression of real proletarian internationalism: “From Gaza to Iran, down with the exploiters”. These elements also called for workers’ councils and rejected any idea of being dragged into the battle between the “reformist” and “hard-line” bourgeois cliques[1]. Such attitudes really scared the authorities and the students were particularly targeted in the arrests. And in general, despite the weight of democratic illusions and other political weaknesses, the bourgeoisie was extremely worried about this “leaderless” explosion of anger. The Supreme Leader Khameini was silent for some time and president Rouhani was more cautious than firm. The government even announced that the rise in fuel prices would be cancelled. It’s true that symbols of the political and religious authorities were targeted and in some cases burned down: banks, public buildings, religious centres and above all the HQ of the Revolutionary Guards, the regime’s militias. Violent clashes with the police led not only to arrests but to a number of deaths. Bit by bit the tone of the authorities, and their reaction, grew firmer. Rouhani and Khameini announced that violence and illegal actions by “troublemakers” would be severely punished. They accused the demonstrators of being “enemies of Iran”, of being in league with foreign powers, in particular the USA and Saudi Arabia.
And indeed, on the social networks like Twitter, many of the hashtags calling for demonstrations originated in Saudi; similarly, the Mujahadin organisation based in Paris, opposed to the Iranian regime and close to the Saudis, declared its support for the demonstrations. And of course, Trump with his provocative statements and the other rival powers want a weakened Iran. But this was a movement that has its origins inside Iran. Taking advantage of the movement’s lack of perspective, the regime could prepare the ground for repression. It mounted counter-demonstrations supporting the regime and its ayatollah, shouting slogans like “Death to America” and “Death to Israel” and denouncing “sedition”. The head of state could play on these divisions and announce that the alternative was “us or chaos”. By evoking the tragedy which followed the original protests in Syria and elsewhere, the leadership was clearly threatening the demonstrators, insinuating that their movement could only result in a similar chaos and bloodshed.
The difficulties of the proletariat in Iran
This spontaneous social movement is the most important since the social crisis of 2009, the year of the “Green movement”. At this time, there was a real danger of the proletariat being caught in the crossfire between competing bourgeois cliques. As we wrote at the time:
“Opposing the bloody, corrupt elements around Ahmadinajad, we see people who resemble them like two drops of water. They are also in favour of an Islamic Republic and for building the Iranian atomic bomb. All these people are basically the same because they all stand for their own personal and nationalist interests”
Today, much more than in 2009, the movement is a real expression of the exploited and the disinherited themselves, but it is without a clear proletarian orientation, apart from a few minorities. The struggles of the proletariat in Iran have without doubt been part of the struggles of the world proletariat since the 1960s, especially in the oil industry, transport, education and so on, but even when the struggles reached their high point in 1978-79, when they precipitated the fall of the Shah, the political weaknesses of the proletariat made it possible for a horde of religious fanatics led by the Ayatollah Khomeini, supported by the Stalinists and other left nationalists, to install themselves in power. Brutal repression came in the wake of the “Islamic Revolution”. Many militant workers were executed for taking part in strikes under the regime of the mullahs. The proletariat was also subjected to the terrible war between Iran and Iraq between 1980 and 1988, which left millions dead.
Since then, there have again been some important struggles, such as during the year 2007 when 100,000 teachers came out in solidarity with the factory workers, but the underlying difficulties remain today. Despite a very strong fighting spirit, and the fact that the current movement was based on economic demands which are part of any proletarian struggle, the movement has waned because of a lack of a real class identity and perspective. At the same time, the workers are still very much faced with the permanent rivalry of different bourgeois factions, and there is a real danger of the class being dragged behind one or the other[2]. On top of this, Iran is surrounded by countries at war which makes it very difficult for the workers of Iran to win the solidarity of the proletariat in these countries and strengthens nationalism within their own ranks.
But in a more profound sense, the weaknesses of the proletariat in Iran are above all those of the world proletariat, since even in the most experienced sectors of the class we are seeing a serious loss of class identity, and above all a loss of perspective that would give a real meaning and direction to the class struggle.
Nevertheless, the bravery and militancy of the demonstrators in Iran should be an encouragement to workers of the world. Fighting against austerity, raising demands in defence of our economic interests, this remains essential if the class struggle is to again raise its head. But the real solidarity with our class brothers and sisters in Iran consists in reviving and consciously taking charge of our own struggle, not only against austerity but against the capitalist system as a whole.
WH (5 january)
[2] See our online article ‘Iran: the struggle between bourgeois cliques is a danger for the working class’
As we show in our article ‘Demonstrations in Iran, strengths and limits of the movement’, although there are promising signs of working class resilience, the danger is very real, not only of bloody repression, but also of the manipulation of the popular anger by the different fractions of the ruling class. The old conflict between “reformers” and “hard-liners” within the “Islamic Republic” has entered a new stage. The reformers around president Rouhani are convinced that a major policy change is necessary in order to consolidate the considerable gains made by Iran in recent times. These advances have taken place essentially at two levels. At the level of foreign policy, the Shia militias and other forces supported by Tehran have made important advances in Iraq, Syria and the Lebanon (the so-called revolutionary sickle from Iran to the Mediterranean) and in Yemen. At the diplomatic level, the regime was able to make an “atomic deal” with the major powers, leading to the lifting of certain economic sanctions (in exchange for a formal renunciation of acquiring an Iranian atomic bomb). Today these advances are menaced from a number of sides. One of them is the alliance against Iran which the USA under Trump is trying to construct around Israel and Saudi Arabia. Another is the economic situation. Unlike at the military or diplomatic level, Iranian capitalism has made no economic progress in recent years. The contrary is the case. The economy is groaning under the cost of the operations of Iranian imperialism abroad, and weakened by the international sanctions. The United States has failed to lift economic sanctions against Iran as it had promised as part of the nuclear agreement. Instead, it has been obstructing the engagement of European companies in Iran. Now, under Trump, the US sanctions will even be reinforced. Another central problem is that the competitiveness of the Iranian national capital is being strangled by the highly anachronistic theocratic-clerical bureaucracy, which has no idea how to run a modern capitalist economy, and by the kleptomaniac system of the “Revolutionary Guards”. From the point of view of president Rouhani, breaking or at least curbing the dominance of these structures would be in the best interest of Iranian capitalism. It would also give Iran a more liberal image, better suited to countering the sanctions, the diplomacy and the rhetoric of its enemies abroad.
But on account of the dominant position of the hardliners within the armed forces, the reformers have few legal means at their disposal to put through their policy. This is why president Rouhani began to call on the population at large to formulate its own critique of the present economic policy, and of the corruption of the Guards and their business interests. The reformers were trying to use popular discontent as a lever against the hardliners. Such a hazardous policy reveals the backwardness and lack of suppleness of the ruling class in Iran, which is unable to settle the conflicts in its own ranks internally. It was all the more hazardous when one considers that Rouhani was perfectly aware of the popular disappointment once the promised economic boom which was supposed to follow the lifting of sanctions failed to materialise. Moreover, Rouhani was apparently not the only one taking chances. The president himself has accused his hardline opponents of having organised the first demonstration in Mashhad, which is the bastion of Ibrahim Raisi, the candidate of the hardliners in the presidential elections last May. The main slogan of this demonstration is indeed reported to have been “death to Rouhani”. But as soon as the protests extended, other slogans were heard such as “death to Khamenei” (the religious hard-line head of state), “down with the dictatorship”, or “What is free in Iran? Thievery and injustice!” The appearance of such slogans directed against the regime as a whole indicates that neither of the two main bourgeois fractions is able to manipulate the popular anger at will against the other.
This however in no way lessens the danger of the working people being manipulated by the ruling class. It is important, in this respect, to remember what happened in Egypt, where popular protest (“Tahrir Square”) involving mass meetings and demonstrations, but also workers’ strikes, swept away the Mubarak regime. This was at the beginning of the “Arab Spring”. But this was only possible because the military let it happen (president Mubarak intended to curb the influence of the generals on politics and above all in the economy). In Iran (as in Egypt at the time) foreign powers were also involved. The claim of the clerical leaders in Tehran today that the protests in Iran have been instigated by foreign powers (USA, Israel, Saudi Arabia) has enraged wide sectors of the population, since these claims arrogantly deny both their very real suffering and their ability to take the initiative themselves. This does not mean, however, that these and other rival powers are not trying to destabilise the Iranian regime. In an interview given in April of last year, the Saudi crown prince Bin Salman declared that the conflict between his country and its Persian neighbour would be fought out “in Iran, not in Saudi Arabia”. One of his think-tanks in Riyadh has been advising him to stir up discontent within the Sunni religious minority in Iran, as well as among ethnic minorities (one third of the population of Iran are not Persian). In Egypt, after the fall of Mubarak, a civil war between the two main fractions of the bourgeoisie – the armed forces and the Muslim Brotherhood – was only averted through the ferocious repression of the latter by the former. In Syria, the social protests triggered off an imperialist war which is still raging. Whether in Egypt, Syria or Iran, the working class is not only relatively weak, it is also internationally isolated on account of the present reflux of class struggle, class consciousness and class identity at a world scale. Without the support of the world proletariat, difficulties and dangers for our class sisters and brothers in Iran are all the greater.
Steinklopfer. 9.1.2018.
Just over a year ago, the bourgeois class launched an ideological campaign around the Panama Papers. Loud publicity was given to a blacklist of fiscal havens. It was billed as the discovery of a series of murky networks and geographical areas, outside any legal controls, where enormous amounts of capital are being stashed. As it happens this is a song we have been hearing a lot since the phase of acute economic crisis opened up in 2008-9.
But now it’s all starting again! A new ideological campaign has been launched and all the bourgeois media are involved. This time they are talking about the Paradise Papers. All kinds of personalities are involved: politicians, businessmen, sports and entertainment stars. Queen Elizabeth the Second herself has not escaped the scandal. The bourgeois media and a good number of states are apparently being infected by a new virus which is obliging them to seek for truth, morality and fairness.
An ideological campaign against the proletariat
The state and the media cry about injustice: certain rich people don’t want to pay the taxes they owe to the national collective, to the state! Even some of the biggest global companies are evading their taxes! This is theft pure and simple! And in contrast to this, most of us, even when our wages hardly allow us to survive, are paying our taxes in full…
The left of capital has a particular role to play in all this. In France, it’s Mélenchon’s party, La France Insoumise, which shouts the loudest and proclaims that it is scandalised. Their slogan is simple: “make the rich pay, not the poor!”. All the leftist parties are on the same wavelength: The NPA (New Anti-Capitalist Party) and Lutte Ouvrière also join in the refrain. If the state was doing its job, none of this would be going on. There would be more money for hospitals, schools and all the other public services. In fact these arguments are not very different from what the government itself is saying. It’s the same story in all the developed countries.
A basic law we’ve learned from the history of capitalism is that you should never take the declarations of the ruling class and its media at face value. So what is being hidden behind this deafening chorus, this demand that the cheats and thieves be caught and punished? That the rich should pay what they owe and that that no one should escape from “equality before the Tax”? What’s the reality behind all this, and what do these fiscal “paradises”, these tax havens, really represent?
Tax havens: a world-wide reality linked to state capitalism
A tax haven is a country, a part of a country, or an organism where, usually quite legally, money can be stashed with impunity. Little or no tax is paid and no questions are asked about where the invested capital comes from. There are thousands of such tax havens around the world. And they are not only to be found in more or less exotic places like the Virgin Islands or Bermuda. Nor are they limited to the small states we hear about so much in the media, such as Luxemburg, Malta or Ireland. In fact the leading tax haven in the world is the City of London. London’s financial district is the centre of a spider’s web connected to any number of offshore tax havens. In other words, the capital amassing in the parallel circuits of the tax havens comes here to be invested. The biggest banks in the world, such as the HSBC and their shadowy agencies (the “back banks”), the most powerful investment funds and the world’s leading companies use these networks to circulate a large part of their capital. Money from drugs, prostitution, arms sales, floods all these networks. Reality is very far from the picture painted by the media, who focus on this or that celebrity hiding their dough in Swiss banks. This is a whole system, managed by the states themselves. One of the essential features of decadent capitalism is the concentration of capital in the hands of the nation state, which has become the entity around which the national capital organises its struggle, both against the proletariat and against other national capitals. States are not the dupes of multinational companies who escape the rules laid down for the operation of the world market. On the contrary, they are the main protagonists on these markets and in the final instance they are in control of the banks and the companies. Despite appearances, above even the most powerful banks and multinationals, the public authority of the state takes precedence. Multinational firms like Exxon, General Motors or Apple are always closely tied to the state, whether through public investments, the nomination of directors and so on. “Contrary to an opinion often expressed, by acting as the impetus for truly innovative projects, the public organisms (public investment banks and others) don’t push out the banks or private firms. They do what the latter don’t do or can’t do. Far from being victims of exclusion, the private enterprises could not develop if the state didn’t prepare the ground for them by making investments, notably in key research, which they could not do either financially or ‘strategically’”[1]. For a state, the big multinationals which are linked to it often represent a strategic sector of the national economy. This doesn’t mean that the private interests of these enterprises or banks always coincide exactly with those of the state. The quest for “tax optimisation” or the hunt for tax fraud are very current illustrations of this. But in the world’s financial markets and stock exchanges, the authority of the state remains a preponderant one. For example, the Euronext fusion of the stock exchanges of Paris, Bruxelles and Amsterdam openly depends on public financial authorities such as the Autorité des Marches Financiers in France or the Autorité Européene des Valeurs Mobilières. These state organs survey, control and can even sanction private enterprises. Here again, the interests of private operators can often come up against those of the state, but they can’t completely escape its control.
Despite the efforts at regulation, states have permitted an exponential development of what’s called the “little by little” market[2], which paradoxically makes activities and operators more opaque. This parallel market is mainly reserved for the very big investors (precisely the ones most closely linked to the state), those whose exchanges are measured in billions. More than 50% of these transactions, a good part of them highly dubious, take place at financial centres like the City or Wall Street. And the actors are not exactly unknowns: JP Morgan Chase, Goldman Sachs, Barclays Capital, etc. We should also add that central banks like the European Central Bank or the FED are key players as well.
While the finger is most often pointed at the more exotic tax havens, the World Bank stresses that “the financial systems of developing countries have less depth and a more limited access than those of the developed countries”. In short, the essential job of tax evasion or “optimisation” by the grand conglomerates, acting behind a myriad of screening companies, gets done in the “domicile”. All states encourage the formation of “offshore” resources under their aegis. The tax havens are largely dependent on the big countries, who use them to attract foreign investment as well as to avoid too great a flight towards tax havens controlled by other states, or which remain more or less out of their own control. Thus, France’s favoured tax haven is the Principality of Monaco. Britain has the Channel Islands, the USA has the Bahamas or the state of Delaware, Austria and Germany have Liechtenstein. The list goes on. But more than this, states have their own investment funds destined for these parallel circuits. On 11 November 2017, the Belgian Finances Minister Johan Owerdeveldt declared that he would endeavour to make sure in the future that the state would not support investments in tax havens via the Belgian investment society which is 64% owned by the state. All this is sheer hypocrisy, theatrical speeches that have been going on for years while nothing really changes. And for good reason. Since the 1980s, the proliferation of tax havens has become a very widespread phenomenon. They would not have been able to play such a key role in the world economy if, under the guidance of the major states, there had not been so much deregulation of finance. Since then finance capital has assumed gigantic proportions across the entire planet. It is this form of capital which has become so necessary for the state itself to maintain capitalist accumulation. The search for ever-growing investment and profit has brought about an evolution in state capitalist policy on a global scale. It is this process which lies at the roots of the possibility and necessity to develop this network of tax havens to drain off a large part of liquidity. Thus Business Bourse on 18 November 2017 wrote: “the evil given the name of tax havens function like the brothels of capitalism. You do dirty business which can’t be publicly recognised but is indispensable to the functioning of the system. Like houses of ill repute in traditional society”. The Paradise Papers, like the Panama Papers, were uncovered and made public by investigative journalists who belong to 96 of the most important newspapers in the world. The leading papers in the western world are all included. In Britain, it’s The Guardian. In France, it’s Le Monde. The bourgeois press seems to be on the trail of the tax evaders. But here again the orchestra is being conducted by the capitalist state. All this investigative journalism is tied to the interests of the national economy and the states which present themselves as the guarantors of social justice and as the victims of “financial gangsters” and “greedy bankers”.
Tax havens: cogs of the capitalist economy in crisis
Tax havens have taken on a powerful weight in the reality of world commerce. Two thirds of Hedge Funds, speculative investment funds, are domiciled in tax havens and play a key role in investments in production and the financial sector. More than 40% of profits from the big global companies and banks end up in tax havens. Already in 2008, just after the appearance of the open crisis, 35% of financial flows were passing through these offshore locations. But even more significant is the fact that 55% of international trade depended directly on these flows of capital. And this tendency has increased exponentially since then.
A better control over the tax havens: a necessity for all capitalist states
A question is posed: why are the capitalist states now orchestrating this huge media campaign? It is well known that capitalist nations and their states are weighed down by global debt. True, not all of them to the same degree. Germany, for example, is a relative exception. But the USA, Japan, the other countries of Europe, all are experiencing dizzying levels of debt. And China has become a leading model in this trend. The capitalist economy has an imperious need for tax havens today, but capitalist states are desperate for funds. The finances of the central banks are not sufficient to bear the weight of state debts, so that governments have a real need for tax revenue at a time when a large part of such revenue is escaping them thanks to the tax havens. In July 2012 the “independent” foundation Réseau pour la Justice Fiscal published a study on tax havens and estimated that tax evasion accounts for 25,500 billion euros, more than the combined GNP of the US and Japan. This comes at a time when every big state has to increase its military expenses to face up to the spread of imperialist war around the world, and to deal with an explosion of unemployment and poverty. While each state is trying by all possible means to reduce the benefits conceded to the sectors of the proletariat who have been ejected from work, this also involves maintaining an increasingly expensive police control over these sectors and the population as whole. So behind the international ideological campaign around the Paradise Papers we can find a ferocious fiscal competition. As much as possible, states must prevent their rivals from attracting capital to the tax havens within their sphere of influence and thus allowing companies to avoid paying taxes in the countries where their profits are being made. In other words, in every country state capitalism is stepping up the trade war. Behind these famous “discoveries” by the so-called “independent” inquiries by all the big newspapers we can discern the demands of capitalism in crisis. Along with the need to get their hands on liquidities and deal with tax fraud, the capitalist states are above all trying to get a better control over the companies acting in their sphere of influence, and this means regulating the obscure world of finances at some level. The big international organisms have been trying to do this for some time, especially in the mid-90s:
“Following the Group of Seven summit in Halifax in 1995, a series of initiatives aimed at a better functioning of financial markets was launched, to a large extent under the auspices of the International Monetary Fund and the Bank of International Settlements. These had the object of improving transparency and the way that financial and economic data is divulged, of strengthening surveillance of national and international financial systems and putting in place mechanisms of support for periods of crisis and providing training in the supervision of the finance sector”[3]
Despite the measures taken, the reality of the economic crisis, the short-term vision and irresponsible policies of certain private or even public operators, and the overall trend towards every man for himself - all this has increased the danger of a fragmentation of trade and of the world economy. The endless scandals like the Panama Papers and the Paradise Papers, blown up by the media, serve to underline the need for greater control by the state, the need to rein in those who flout discipline and work in the shadows to the detriment of the economic needs of the major states. As we can see from the whole history of the complex and fragile efforts to keep finance under control, tax havens will still be useful and are not going to disappear. But the state has to remain the chief gangster, retain the monopoly of a whole mass of capital which could escape its control if it doesn’t act firmly. This is all the more true at a time when corruption, “affairs” and what the bourgeoisie prudishly calls “conflicts of interests” are becoming more and more commonplace, undermining the higher interests of the state. The height of hypocrisy is that it is the heads of government themselves who are often the leading tax cheats and specialists in “tax optimisation”. Among the revelations in the Paradise Papers, let’s not forget all the politicians who are often the most zealous defenders of austerity and of anti-working class measures[4].
The working class has nothing to gain from increasing regulations on tax havens
Capitalism in crisis breeds both tax havens and attempts to regulate them. Just as it breeds more and more unemployment, insecure jobs, and poverty. This degradation of working class living standards has nothing to do with whether tax havens are regulated or not. It’s in capitalism’s interest to make a profit from the exploitation of the working class. A worker who doesn’t add to the growth of capital is a useless commodity that is maintained at the lowest price in order to preserve social peace. It’s an unprofitable mouth to feed and the mass of workers without work is rising inexorably. Given the level of state debt today, a bit of extra tax revenue isn’t going to solve the growing budgetary difficulties. Only a reduction in what the bourgeoisie calls “social spending” is on the agenda. Behind a supposed moralisation of capitalism, the so-called struggle against tax paradises and fraud, the real future of this system is the accelerating decline of every aspect of proletarian living conditions.
Stephen, 28.12.17
[1] L’État conserve un role majeur dans l’innovation’, Le Monde, 27.1.14
[2] On a “little by little” market, transactions are concluded directly between buyer and seller, without any commission to the stock exchange through which the transaction takes place
[3] ‘The globalisation of financial markets and monetary policy’, a speech by Gordon Thiessen, a former governor of the Bank of Canada
[4] A few names revealed in the Panama and Paradise papers:
- The American Secretary of Trade, close to Donald Trump
- The former Tory treasurer Michael Ashcroft
- The Icelandic Prime Minister Gunlausson
- In Brazil, the ministers of the Economy and Agrculture, Henrique Meirelles and Blairo Maggi
- The Argentine president Mauricio Macri
- A close associate of Canadian Prime Minister Justin Trudeau
- Ian Cameron, the father of David Cameron
- A number of Russian oligarchs close to the Kremlin
- The business lawyer Arnaud Claude, associated with the former president of the Republic in the Sarkozy cabinet