Crisis on His Doorstep

Scan page 8

bye han NOW, America's ederal budget deficit was Apposed to be safely ding down towards zero. Instead it seems intent soaring out of control to the economic stratobere.

By now, the famous tax* was supposed to have int adrenalin coursing rough the veins of Amer•'s somnolent capitalist ss. Instead, more and are firms are collapsing • economic anaemia. Br now a new model perican capitalism was pposed to be raising the mid's largest economy to • heights of produc* and consumption. stead it continues to lanest in what is becoming le deepest - and could be most intractable -Ep since the 1930s. By cw, as a result of all is. Reagan's reputation ¡the saviour of enterprise id the American spirit * supposed to have been icing like a beacon in the rection of the 1984 Presisial elections.

Istead. the President as on the verge of comdisgrace at the very in the economic As the start of a new financial year approaches the US Federal government still has no budget. If present policies continue unchanged then its deficit next year is presently predicted to be the almost unbelievable sum of $180 billion — i.e. a Federal government deficit of nearly $1,000 for each person in the population, nearly 10% of America's total national income.

Deficit

The furious budget debate which has raged in Washington over the last few months is basically about how much this vast potential deficit - which everyone claims to find unacceptable - is to be reduced, and how.

The size of the problem is clear from the fact that to eliminate the deficit altogether the Federal government would have to cut spending and/or increase taxes to an extent which would reduce the real take-home pay of the average American family by $4,000!

So, not surprisingly, not even the most conservative politicians want to cut it now to less than $100 billion.

Even though there is now a broad political consensus around that figure (which a year ago would have been universally • declared "unthinkable""), American politicians seem to have reached a complete impasse about how to achieve it.

Reagan and right-wing Republicans insist on maintaining the rapid increase in military spending. This (by far the largest single item of Federal expenditure) is to them inviolate, though liberal Democrats would like to reduce it.

Many Republicans and even Democrats want to fill the gap by raising taxes. Some of them (not Reagan himself) want to go so far as to postpone or even revoke altogether the 10% annual tax cuts which did so much to get Reagan elected in the first place. • The third possible way to bridge the gap is by cutting non-military spending on education, health, social welfare and social security (pensions)..

Liberal Democrats this and Republicans go for it only very reluctantly since they feel the electorate breathing down their neck. In November the whole of the House of Representatives and one-third of the Senate will have to be re-elected.

Reagan himself has now come down for a plan which would raise some taxes and mount a massive attack on Federal medical expenditure for the elderly.

It is one of seven different budgets which were presented to the House of Representatives last week. Because no politician so near to an election wants to sanction anything which would obviously l harm many of his or her constituents, every one of the seven was voted down.

The American budget is out of control, and this situation may well last until after November's elections.

Meanwhile, the potential size of the uncontrolled deficit is one of the main factors which is keeping interest rates high, because lenders expect the Federal government to be an extremely heavy borrower.

But while fiscal anarchy keeps interest rates up. the Federal Reserve's tight monetary corset has, along with a fall in overall demand, helped to bring inflation down.

Hence the gap between the interest rate and the rate of inflation (the real cost of borrowing money) has been raised to its highest level in history exactly when a sharp squeeze on profits makes borrowing essential for the survival of many companies. So the result is a vicious circle as some companies plunge into a quicksand of indebtedness from which there is no escape.

The level of business failures is rising fast and is now virtually at its highest post-war level. More important it is big and once successful companies like Braniff Airways which are going bankrupt or tottering.

And if that were not enough the money markets periodically freeze in their tracks when faced with threats of default by Poland, Argentina or others and events like the collapse last month of a financial speculative company called Drysdale Government Securities.

The shock waves from that explosion wiped out over a quarter of the annual profits of the immense Chase Manhattan Bank (America's third largest) and a rather larger proportion of its credibility.

Of course, some areas of America still boom. And American capitalism is hardly on the verge of collapse.

But the present recession is deep, much deeper than was forseen. In the last year industrial production has fallen by more than 7% and unemployment has gone above 10 million, its highest since the Great Depression.

Inanities

And what is perhaps more significant, the inanities which emerge from time to time from the White House are almost the only optimistic words to be heard at present on the immediate future of the US economy.

The unremitting pessimism of the American financial press today approaches a catastrophism more expected from the far left.

And early expectations of President Reagan from the capitalist class have collapsed even more than the economy• If, two years from now, Reagan is preparing to fight for a second term he will certainly not be basing his campaign on the success of Reaganomics.

Scan page 9

Jenny Pearce's book "Under the Eagle" (new edition just out - Latin American Bureau, £3.50) chronicles how the oncederided "banana republics" are challenging ( US imperialism. Colin Foster - and gives 1909: US backs an uprising lefinite lease to overthrow the governd a canal. US ment in Nicaragua yand ine in 1908, takes control of customs stationed in 1910: US troops land in UNITED STATES OF AMERIC. ERS!

•San Pedro Sula HONDURAS ucigalpa Estelí NICARAGUA Leon Managua COSTA RICA l island of Grenada ¡lation 100,000). iry had amassed a fortune while most of population lived in ty as bad as anywhere in the region except , The new government napped out a vigorous ming policy and allied Nicaragua and Cuba. i Reagan's philosophy -een voiced by Fred rood, a formér Presithe American ber of Commerce in mala, a country • Carter had cut off ry aid because of the * rights record of the prship.

My should we be ed about the death B? They're bumpif the commies, our les. I'd give them power... tit! There's no cars Guatemala could follow El Salvador Lake Nicaragua Puntarenas Limón Canal San José tion, we can't wait 'til Reagan gets in. We hope Carter falls in the ocean real quick ... We all feel that he (Reagan) is our saviour"

El Salvador has been the front line since 1979. In 1972 a coalition led by Christian Democrats won the elections, but were deprived of victory by fraud. Some officers tried to stage a "constitutionalist" coup against the oligarchy. I The oligarchy defeated them, with US aid. Gradually El Salvador's politics polarised into civil war. Guerrilla groups were formed and gained support during the '70s.

In 1977 the die-hard oligarchs forced the abandonment of a very limited land reform and hardliner General Carlos Humberto Romero took Caribbean Sea Panama Zone Colón Panama PANAMA O power. State terror and assassination squads stepped up their activity.

In October 1979, as the US was trying to reassess its policy on El Salvador in the wake of the Nicaraguan revolution, some younger officers seized power.

They promised reforms. But they continued repression, and were unable to push through the reforms against the opposition of the oligarchy. In January 1980 most of the members of the new government resigned, and another junta was formed.

The US pressed for reforms. In spring 1980 the junta announced a major land reform, the nationalisation of the banks and foreign trade - and a state of siege.

Some of the land reform - affecting the biggest estates - was implemented. The rest was soon postponed indefinitely. But the state of siege was implemented through massive repression. At least 13,000 people were killed in 1980, mostly by the armed forces.

The opposition consolidated. In April the FDR political alliance was formed and in October the FMLN military alliance.

From à socialist point of view, the FDR alliance threatened to limit the revolution. Instead of making agreements for common action with the Tijuana Mexicali Juárez Chihuahua o adal &. PACIFIC OCEAN 1000 km summarises the story.

Leon, Monterrey MEXICO To Leon Mexico • Acapulco < middle-class opposition while maintaining their own independent politics, the revolutionary socialist left had merged themselves into a political bloc on a programme restricted to radical bourgeois reform.

But the US was not reassured. On January 10, 1981, the guerrillas launched a major offensive. On January 14 the Carter administration resumed military aid (cut off in March 1977).

The US has also built up the armed forces of Honduras for joint actions with the El Salvador forces, and secured military supplies and (reportedly) advisors from 1 Argentina to El Salvador.

The elections this March were meant by the US to be a showpiece - to prove it was defending democracy.

But only Britain among European governments endorsed these elections where left-wing candidates could not stand for fear of death.

And the victory for the die-hard right has increased the US's problems.

More than ever it is clear that Reagan's defence of US imperialist power means an alliance with the death squads.

In Guatemala, too, state death squads terrorise the country. Amnesty International, a body that weighs its words carefully, titled its pamphlet on Guatemala, "A government programme of political murder"

"Nearly 5,000 Guatemalans have been seized without warrant and killed since General Lucas Garcia became President of Guatemala in 1978"; , Amnesty International reported in 1981. ''The bodies of the victims had been found piled up in ravines, dumped at roadsides, or buried in mass graves.

•Thousands bore the scars of torture, and death had come to most by strangling with a garotte, by being suffocated in rubber hoods or by being shot in the head...

•The evidence compiled and published by Amnesty International in recent years indicates that routine assassinations, secret detentions, and summary executions are part of New Housto Irleans, Of Mexico La Vera Mérida Puebia " Oaxaca BELIZE HOND GUATEMALA 1898-1902: US troops occupy Cuba - supposedly in support of its fight for independence from. Spain. The 'Platt amendment' to independent Cuba's constitution (1901] gave the US powers to intervene whenever it saw fit. It sent troops again in 1906-9, in 1912, and in 1917-23. 1901: US takes Puerto Rico from Spain as colony. 1903: Panama [previously part of Colombia] becomes clearly defined programme of government in Guatemala...

Such was the record of the Lucas Garcia regime that Reagan was unable to reverse the block on military aid imposed under the Carter administration. The new regime of General Rios Montt, who took power in a coup this March, continues the military dictatorship, but may provide the pretext for the US to resume aid. (Up to now Guatemala has had to rely on Argentina, Chile Tampale Miami Havana Cienfuegos CUBA Cayman (Brit.) Led independent under US Honduras. sponsorship the US an ind on land to buil troops interve 1912, and 19 18, and are revenue permanently the Canal Zone 1904: After the government of the Dominican Republic defaults on payments to a US finance company, the US takes over collection of customs duties there. 1905: US marines land in and Israel).

Guerrilla operations are increasing; and the US is worried. Guatemala is a bigger country than El Salvador, and much more important economically. Secretary of State Alexander Haig told the press this March:

"It's a matter of weeks or months before you see -perhaps even more consequential in terms of potential damage to US interests - a similar situation (to El Salvador) developing in Guatemala. It is a clear, Bermuda : it.)

TLANT OCEAN Nassau BAHAMAS Turks Caicas (Brit.)

Camaguey o 'DOMINICAN Juano Puerto Rico (U S./ San HAITI REPUBLIC Santiago • { Santo Port Dominge au Prince Caribbean Hónduras. 1912-25 and 1926-33: US marines occupy Nicaragua, and train, equip and advise the National Guard. 1914-34: US marines occupy Haiti. 1916-24: US forces occupy the Dominican Republic.

self-influencing sequence of events which could sweep all of Central America into a Cuba-dominated region...

Direct intervention by the US military in Central America still faces big difficulties. A huge majority of the US people, vividly remembering. Vietnam, is opposed. Official propaganda efforts to convince them about the "communist menace" have flopped disastrously.

But as other options narrow, direct intervention cannot be ruled out. Every world event, from Jaruelski's coup in Poland to the Falklands war, will be used by the reagan team to - 11. - 41 - 7-- d ve keep up relentless pressure for an arms build-up and reassertion of the US's power in the world.

Delaying

Reagan can hardly succeed in turning the clock back to the days when the oligarchies and the US corporations were absolute rulers in Central America. But he can succeed in delaying and restricting the victories of the current liberation struggle, and in making the working people of Central America pay a higher price in blood.

Whether he does or not depends on the success of the US working class in challenging the warmongers and capitalists who rule them, and on our efforts in fighting Reagan's main ally - the Tory government

Scan page 10

•Thatcher's War WARMONGERS!

Argentina it is going to come economic sanctions against Now that the fighting is well. workers, so that the Argen- through an understanding Argentina are part of the Organiser DUMP THE Thursday 3 June 1982. Page GUATEMALA HONIXIRAS SALVADOR EL.

NICARAGUA COSTA RICA Now that the fighting is well. underway in the South Atlantic, what chance do you think we have of building a movement for the withdrawal of the Fleet?

Well, obviously it's very difficult at the present time. There is a shooting war. The situation has gone from bad to worse. Indeed it really exposes the official leadership in the PLP and indeed in the TUC.

In no way do I suggest that we should support the junta, although on balance the Falkland Islands must really belong to Argentina, because of the historical aspect.

Our position as socialists must be to develop our movement so that we can link up, despite the odds, with the Argentinian workers, so that the Argentinian workers time i a u ho can be encouraged to fight back against Galtieri and so that we can develop the political understanding of British workers.

The Tory government is using the war in the South Atlantic as a handy diversion. They can tell workers 'forget about mass unemployment, forget about falling living standards, the real issue is elsewhere' There is a whole lot of work to be done by the left and apart from a few groups like your own, very little is being done.

But I and several other lett wing Labour MPs felt that the TUC General Council should invite the CGT (Argentinian TUC) to send a delegation to this Labour movement opposition to the war in the South Atlantic is still very inadequate, with no lead being given by the official leadership. Socialist Organiser spoke to Ron Brown MP, an opponent of Thatcher's war.

country to discuss and to build up solidarity between British and Argentinian workers.

That is particularly important, because I believe that if we are to develop a fight against the junta in this country and the junta in Argentina it is going to come through an understanding between the two sections of the working class.

Unfortunately the TUC General Council or at least the TUC General Council Secretary has not even indicated that he received a letter.

So I'm disappointed but perhaps not surprised I think the activists have been confused too. Some normally sound left-wingers feel that calling for the fleet to return to port, simply means supporting Galtieri regime.

Only a few people have come out onto the streets and at the last minute tried to get things moving. Do you think that those who call for an end to the , fighting but support economic confusion?

Some of them believe that some action has got to be taken against the junta. But to argue that the capitalist system takes action agaunst the junta is laugaable.

The bankers certainly do not accept it. At a recent meeting in Vancouver they made it quite clear that it was business as usual. So the international capitalist system supports the junta in Argentina and they support the junta in Britain.

What impact do you think the position that Foot has taken on the Falklands crisis will have on his future as leader of the Labour Party?

Foot claimed to be a peacemonger, and he has compromised himself as very much a warmonger, like it or

----- pull-quotes -----

HOW THE USE CONQWERED CER RAL AME

JAMAICA Kingston NIC. IRAGUA RICA

«The real casualties are the working class'