Issue 216 of SOCIALIST REVIEW Published February 1998 Copyright © Socialist Review


Editorial, Far East, Algeria, Israel, Ireland, Liverpool dockers


The incredible developments in the White House during late January threaten to unseat Bill Clinton - the first Democratic Party president since the 1970s - over allegations of sexual exploits and the possible charge of perjury. Even some of Clinton's erstwhile supporters have talked of his resignation or perhaps impeachment. This furore has dominated all other issues - even two of the major problems now facing the US ruling class which it has no clear idea how to handle.

The first is the crisis which has dogged the once dynamic economies of the Far East. Despite IMF rescue packages, which are already causing political instability, there is a real possibility of a much more serious business and financial crisis - now referred to as a meltdown situation. The problem for America's rulers is that they have simply no idea if the Asian crisis can be contained or whether it will spill over to the western countries, leading to recession in the world's biggest economies.

The second problem is the continuing instability in the Middle East. The US, along with Britain, is making noises about possible military action against Saddam Hussein in Iraq. Unable to recreate the coalition that it dominated during the Gulf War in 1991, this time it is threatening to intervene without the agreement of other members of the UN security council. This is a strategy that is fraught with dangers. Not only will it mean, once again, the death of ordinary Iraqis, but with the Middle East 'peace process' in tatters it could destabilise the whole region.

Clinton's predicament seems inexplicable against this background, and alongside the fact that he has been relatively successful as a president from a ruling class point of view. However, his weakness in the face of these allegations is not simply that this latest affair appears to be one of many. It is also that the hopes of many American working people who elected him with enthusiasm in 1992, and again in 1996, out of fear of something worse have been dashed by Clinton's failure to deliver any of the most basic reforms which he campaigned over.

Most fundamental of these was health care. He promised to take on the vested interests - the insurance companies who make huge profits from private care and the corporations who refuse to pay more for their workers' healthcare. Instead he gave up the ghost within a year of his election leaving millions of Americans without any health provisions and millions more struggling to pay insurance premiums.

Clinton rapidly moved onto the terrain of the right wing and has backed laws openly espoused by conservative Republicans. A sign of this came before his election when as governor of Arkansas he ostentatiously signed the death warrant of a black prisoner on death row to avoid accusations that he was soft on crime. He personally pushed through, welfare to work, attacking the poorest sections of US society and insisting that the problem with poverty was the poor themselves. While attacking single parents and the unemployed he has given tax breaks to the better off. He has done nothing to rectify the growing inequality in US society and despite, the economic boom there, real wages have dropped 17 percent over the last 15 years.

Concession after concession has been made to right wing family values. Now that Clinton is being attacked on precisely these issues he has no defence. There may well be a right wing conspiracy against Clinton. But the right would not be able to get away with its attacks had Clinton's policies not been shown to be so hollow.

There are lessons in all this for Tony Blair's government. Blair, after all, has modelled himself on Clinton politically, if not personally. The model of New Labour is a US style Democratic Party, openly backed by big business, and with no organic connections between the party and its working class supporters. Blair too has already disappointed many of his supporters by cutting benefits and attacking workers.

Whether Clinton survives will depend on whether the ruling class estimates that he can still be useful to them in his foreign and economic policies. But any usefulness he had for the workers who elected him is long past.

Crisis in the Far East

A blink of an eye ago, Tony Blair and the west's most reputable economists were pointing to Asia's 'Tiger' economies as proof of capitalism's continuing dynamism and as models for imitation. Now we see the shattering of that illusion.

The Tiger boom was founded on producing more and more goods with labour that was cheaper than in the more developed industrial countries - and then exporting most of the goods. As these exports multiplied, western banks and multinationals poured money into the Tiger economies without any concern for the corruption, nepotism and theft of the Tiger rulers, state officials and capitalists. Everyone who revelled in this boom, including much of the British left, forgot about the rock on which rampant capitalism flounders - overproduction.

The low wages that initially created the boom also weakened it. There wasn't enough money around in the Tiger countries to buy up the ever increasing goods, and the export market could not expand forever. Once the boom faltered, debt repayments became harder to meet, western banks stopped the flow of credit, pension funds took out their money, and the whole edifice began to crumble.

The crisis began in Thailand in mid-1997. It quickly engulfed Malaysia and Indonesia, and then South Korea. The knock-on effects have exposed underlying flaws in the economies throughout the region, including Hong Kong, China and the world's second largest economy in Japan. The shockwaves have also been felt around the world.

In an attempt to prevent countries defaulting or facing economic collapse, the IMF has rushed in with vast sums of money. The US and the financial organisations it dominates are determined to protect the US, European and Japanese bankers who threw money blindly into Asia. They also fear that a spiralling crisis in the Tiger economies could throw Japan into full scale recession - East Asia takes more than 40 percent of Japan's exports. Worse, the crisis could further damage the US economy - Asia supplies a third of US imports and takes almost 40 percent of its exports. The big money boys are also terrified of the consequences of a crash in Asia for the world's financial system, which is precariously balanced on 'derivatives' (stock exchange gambling on what might happen in the future) said to total $98,000bn, about five times total global economic output.

For the people of Asia, the IMF 'rescue packages' promise nothing but further misery. Already, thousands of people have been laid off as companies and banks have folded. Millions more workers face dismissal. Migrant workers are being deported to countries already desperately poor. The Malaysian authorities have threatened to expel hundreds of thousands of the two million Indonesian workers in the country. The Thai government has said it will repatriate up to half a million foreign workers each year, most back to impoverished Myanmar. Most of Asia's states offer little or no safety net for the unemployed, so the workers who made the boom will pay with starvation for the greed of those running the system. This is no small scale disaster: the four worst affected countries alone - Indonesia, Malaysia, South Korea and Thailand - are home to more than 325 million people.

The usual conditions are attached to the IMF intervention: governments must attack welfare spending and workers' rights, and allow unprofitable banks and companies to go to the wall. In South Korea the level of future repayments for the IMF's kindness will hamper any return to growth for a generation.

Fortunately, the governments can't impose these sanctions without meeting resistance by organised labour and others. The strong trade unions in South Korea are fighting to maintain job security, although the union's leaders have failed to convert anger into sustained action and have encouraged workers to believe the futile notion that everyone must pull together to 'save the nation'. In Indonesia 40,000 workers went on strike at the country's biggest cigarette maker, one of its largest employers, in November 1997 demanding higher wages. In January panic buying caused by inflation led to riots and predictions of massive unrest. In Thailand 3,000 workers at Thai Summit Auto Parts, which supplies Honda, Isuzu, Mitsubishi, Suzuki and Yamaha, recently staged protests, blockading streets in a dispute over year-end bonuses. In the Philippines 20,000 people marched to the presidential palace last October to protest against hardship caused by government policies, and a strike forced the government to back down over petrol price rises.

Almost everywhere the tolerance shown towards repressive governments during the period of economic growth has evaporated. Those in power are fearing widespread protests in late January, the end of Ramadan, when millions of workers in Indonesia and elsewhere look likely to be cheated of their annual bonuses. Already 500 workers at a ceramics factory in Indonesia are on strike to protest at getting part of their bonus in unsold crockery.

Unfortunately, there are also signs of increasing popular nationalism and racial tensions, fostered by both governments and some union leaders. In Indonesia, for example, anti-Chinese sentiment is being whipped up among the country's majority Muslim population.

The Far Eastern Economic Review summed up the situation: 'As long as the total pie kept growing, the region's leaders had the means, and the credibility, to keep social unrest and political instability from boiling out of control. In today's climate, the challenge will be to push through the necessary economic and political reforms in a climate in which a single spark could set off the flames of nationalism, protectionism and political resistance.'


Population 58.72m (17th); GDP $130bn (26th). 1994 figures. Figures in brackets indicate world ranking.

May 1997: Finance One, the country's largest finance company, goes bust, along with 15 other finance companies.

June: The new finance minister discovers that the country's reported foreign reserves of $30bn were a myth. In fact, they were $1bn, equal to two days of imports. In addition, the central bank had lent $8bn to struggling financial institutions, including Finance One.

July: The baht is floated, triggering the east Asia crisis. Thailand calls in the IMF.

August: IMF rescue plan agreed.

November: Prime Minister Chavalit resigns, replaced by Chuan Leekpai.

December: 56 of the 58 finance companies permanently shut. 6,000 workers lose their jobs. Stalled production threatens 30,000 jobs in car manufacturing and 60,000 jobs in textiles.

January 1998: Leading Thai financial institutions announce huge declines in profit or outright losses for 1997. The country's largest such institution lost $115m.


pop. 19.5m (46th); GDP $69bn (37th).

March 1997: Central bank restricts loans to property companies and stocks to head off a crisis.

July: Central Bank abandons defence of ringgit.

August: Government restricts trading in stock market. A week later it announces M$60bn fund to prop up stock market.

September: Government delays several infrastructure projects and reverses most restrictions on stock market trading.

October: President Mahathir says Jews are behind attack on Asian currencies. He unilaterally announces plans to use state pension funds to prop up share prices.

November: Government unveils M$500m fund to assist troubled brokerage houses.

December: Government vows to cut state spending by 18 percent and promises no corporate bailouts by authorities. Ringgit has fallen 35 percent against the dollar and stock prices have tumbled 57 percent since February, wiping $200bn off share values.


pop. 189.9m (4th); GDP $168bn (23rd).

August 1997: Rupiah allowed to float. High interest rates introduced.

September: Rupiah under pressure and stock exchange starts to slide. Government freezes infrastructure projects and unveils banking reform.

October: World Bank, IMF and Asian Development Bank offer $37bn rescue package.

November: 16 banks close, with 6,000 job losses. People's savings frozen.

December: Indonesia's credit rating downgraded to junk bond status.

January 1998: Rupiah collapses to 10,000 from 2,400 to the dollar in August after budget breaches IMF terms. Foreign debt found to be $200bn, rather than official $117bn; private sector debt is around $65bn; and up to 80 percent of corporate Indonesia is technically bankrupt. IMF announces a further $33 billion recovery package, attached to an 'austerity programme' and the scrapping of 12 major infrastructure projects. Market estimates $60bn debt repayments due this year. The rupiah continues to freefall, and hyperinflation threatens. Indonesian banks estimated to need £9.3bn to see them through the coming weeks.


pop. 44.6m (25th); GDP $366bn (13th, rising to 11th in 1997).

January 1997: Hanbo Steel collapses with $6bn debts. President forces through labour law reforms in secret session of parliament, sparking three weeks of union protests.

March: Sammi Steel, the country's largest specialist steelmaker, collapses.

July: Third largest carmaker Kia asks for emergency loans.

August: International credit ratings downgraded for banks with heavy exposure to troubled conglomerates.

October: Kia nationalised after banks refuse to provide more loans.

November: Government denies need for IMF bailout. Within a fortnight the won drops below 1,000 to the dollar (a fall of 18 percent since the year began) and South Korea asks the IMF for standby loans of $20bn.

December: Agreement with IMF for a $57bn bailout that includes tough conditions on economic reforms. Short term foreign debt is nearly twice as large as previously thought at over $100bn, and the country has to service $60bn-70bn in short term private sector foreign debt that matures in less than a year. Banks have $27bn bad loans. Kim Dae-jung, a critic of the IMF programme, is elected as South Korea's president. Korean state and corporate bonds reduced to junk bond status. Won falls to nearly 2,000 to the dollar. Stock market plummets to its lowest level since 1987. IMF and donor nations agree to advance $10bn. Foreign banks agree to roll over loans. Up to 60 percent of workers in financial sector could lose their jobs.

January 1998: Further loan extension agreed. In one week 500 businesses go bankrupt, with 2,500 expected to follow suit by the end of the month. The country's 26 commercial banks announce combined net loss of £1.41bn for 1997. On 22 January South Korea asks world banks to exchange £14bn of short term debts from banks for loans with longer maturities.


pop. 5.8m; GDP $126bn (28th).

August 1997: Speculators attack HK$. Overnight interest rates up 150 base points.

October: Stock market falls 6 percent. Overnight interest rates rise to nearly 300 percent. Then stock market falls 10.4 percent, biggest fall in more than five years. Crash hits markets in Europe and US.

December: HK$ under pressure; shares fall over 5 percent.

January 1998: Interest rates raised after week of intense pressure on currency. Stock market falls 14 percent in a week. Peregrine, a huge investment bank, collapses.


pop. 124.8m; GDP Y441, 649bn $4,321bn (2nd).

November 1997: Sanyo Securities, the country's seventh largest broker, goes bankrupt. Hokkaido Takushoku, tenth largest bank, collapses with estimated bad loans of Y2,000bn. Yamaichi, Japan's fourth biggest broker, closes, leaving $25bn in debt and threatening 15,000 jobs. Nikkei falls more than 5 percent. Tokuyo City Bank collapses.

December: Government figures reveal economy in recession. Prime Minister Hashimoto declares huge income tax and other tax cuts. Markets rally. Bank of Japan intervenes after yen falls to 130 against dollar. Nikkei tumbles below 15,000, a two year low. Bank of Japan offers bridging loans to South Korea, amid fears that Korean default would hit Japan. During1997 value of bankruptcies totals £64bn and banks cut off credit to more than 12,000 companies.

January 1998: Bad loans held by banks total $583bn - over three times level previously declared. Nikkei continues to fall, reaching lowest point since mid-1995.


pop. 1,190.9m (1st); GDP $630bn (7th).

1997: GDP growth falls to 8.8 percent from 9.7 percent. Overproduction increasing problem. Only ten of the country's 100 electrical appliance makers expected to survive. Total unsold inventory reaches 609 billion renmindbi in October, 13 percent up on 1996.

1998: State banks have an estimated $20bn of bad loans. In the industrial heartland of Harbin unemployment is above 20 percent and only half of state companies can pay their workers full wages. A local labour expert says that around 33 million state workers need to be shed if surviving companies are to pay their own way. 1.1 million workers are to be shed from the railroad system and 1.2 million from the textile industry. Government discussing devaluing the currency, which would have devastating consequences for other exporters in the region.

Algeria: West put to the test

For years western governments have known about the gruesome events gathering pace in Algeria. They have observed the imprisonment of tens of thousands of opposition activists, the activities of death squads and of state torturers. They have accepted the Algerian government's account: that it is a victim of violent Islamist insurgency and that all measures are required to crush the opposition. This makes all the more striking the new demand by European governments and the US to secure human rights in Algeria and to establish responsibility for recent killings.

Both Washington and the EU have called for 'impartial investigations' in Algeria. This approach is consistent in only one respect: like so many western interventions in the Middle East, it is marked by hypocrisy. Human rights are low on the agenda - what these governments are really worried about are their oil interests in north Africa.

The military regime is widely seen in Algeria as illegitimate. It seized power in 1991, when the army refused to accept the election victory of the Islamic Salvation Front (FIS). It has since used every measure of repression against the Islamist opposition, fully supported by European governments, which have provided arms and military training, and by the US. As recently as December, the US ambassador to Algeria declared that President Zeroul was 'on the right track' in his campaign against the Islamists.

But Zeroul has not been able to crush the opposition and Western governments now fear a serious threat to their economic interests. Algeria has vast oil and gas reserves exploited by Western companies whose installations have been protected by the military. Now these look vulnerable and Zeroul's strategy seems less desirable.

The Financial Times recently spoke for the oil companies: the regime's account of events was 'self-serving', it maintained, and the more that Zeroul refused to allow investigation of human rights abuses, 'the more uncomfortable investors must feel doing business with the generals in Algiers'.

The new year killings in Relizane were particularly shocking - up to 850 people are said to have been massacred. But similar killings have been taking place for at least two years, mainly around Algiers. The regime insists that the perpetrators are members of Islamist guerrilla groups, mainly of the Armed Islamic Group (GIA). It presents them as terrorists driven by a bloodlust which expresses the base character of the whole Islamist project.

Many accounts, however, implicate the army itself. A series of former soldiers and police who have fled Algeria testify that military men dressed as Islamists - even disguised with false beards - have perpetrated the killings. They also speak of almost unimaginable tortures inflicted upon Islamist prisoners in army interrogation centres.

The notion that Islamist groups are solely responsible is implausible. Most of the country is under curfew: the eyes of the state are everywhere, including towns and villages where some of the massacres have taken place. It is far more likely that the reign of terror is one in which both the army and the Islamists are involved, with the former far more deeply implicated. This apparently contradictory situation can only be understood in the context of Algeria's recent history.

After a prolonged anti-colonial struggle against France the National Liberation Front (FLN) came to power in 1962. It immediately faced its own struggle to contain a mass movement which greeted independence by establishing local committees and communes, especially on land vacated by pieds noirs who had fled to France. The movement was finally checked by military means. In 1965 Houari Boumédienne led a coup and set about organising a highly authoritarian regime. Algeria became a state capitalism in which the FLN was the core of a new ruling class of army officers, bureaucrats and managers.

But the FLN was not an homogeneous bloc. It contained a range of political currents - both secular and religious - and of regional groups and kin networks. What held them together was the project to develop Algeria as an independent state. Drawing on the Soviet model - a dominant influence on third world nationalisms at this period - all economic and political activity was centralised. With the army dominant, independent political parties were banned, trade unions were incorporated and strikes declared illegal.

Revenue from rising oil production helped to consolidate the regime internally, although it faced rising opposition from below, notably during the mass strikes of 1977. These were crushed by police and army intervention but working class resistance continued, with long campaigns of workplace guerrilla action involving sabotage and organised absenteeism.

Opposition to the regime was widespread but had no obvious political focus. The Algerian Communist Party (PCA) had been dissolved in 1954, liquidating into the FLN in recognition of the primacy of 'national' concerns. But the left was anyway deeply mistrusted - French Communists having been implicated in the colonial war. One result was that Islamism, which had never had mass appeal in Algeria, began to increase its influence.

In the early 1980s the FLN under President Chadli turned to 'liberalisation'. Following the usual prescriptions of the International Monetary Fund and the World Bank, market reforms were implemented and the whole society rapidly polarised. Privileged sections of the bureaucracy and the army used their positions to secure access to wealth in the new 'open' market. As in Egypt a decade earlier, a layer of 'fat cat' traders and commission merchants quickly accumulated enormous wealth, while millions faced immiseration.

The speed and scale of this process was the key factor precipitating the uprising of 1988 - an explosion of demonstrations and mass strikes affecting every area of industry. The army again responded brutally, intensifying the process of radicalisation among the young and further opening the field to the Islamists. The FIS made rapid progress. At its core were Muslim activists who had long operated on the margins of the FLN regime. They drew in many of Chadli's middle class opponents who felt themselves excluded from the benefits of marketisation, together with large numbers of urban poor and others who had suffered from the reforms. But such a movement was incapable of pursuing mass interests. It soon lost much of its active support, though retaining sufficient popularity to defeat the government at the December 1991 elections.

The FIS has since passed through repeated crises, with a 'reformist' mainstream attempting to reach accommodation with the regime, and radical factions and splits such as the GIA initiating guerrilla offensives. The masses have been left as onlookers.

The regime has nonetheless been unable to rid itself of the religious opposition and has turned to increasingly violent tactics. Its rationale has been the need for overwhelming force against a bloody Islamist movement which, says the regime, has turned to mass killings in revenge against a population which has ceased to support it.

In the face of claims and counter-claims about the massacres, the western media profess puzzlement. In France, national newspapers declare the events 'impenetrable'; in Britain, The Independent laments a 'bizarre' situation, while the Financial Times pleads that 'no one is sure who is to blame'. In fact, similar complex factional struggles have recently taken place in countries in which market reforms have been implemented within a decaying state capitalist economy. When the Soviet Union began to break up in the late 1980s, Communist Party chiefs and senior military figures established all manner of relationships with sections of the bureaucracy and the army, with regional party factions and with the Mafia. The result is a complex of cross cutting alliances and a mass of factional conflicts.

The difference in Algeria is that the Islamists appear to present a coherent national opposition. In fact, the Islamists are not a new current but are closely associated with the old state structures and still implicated with them, even the FIS is led by men who formerly had their own stake in the FLN and who still wish to control the state, hoping to advance their influence and to implement their programme of 'Islamisation'. The FIS, Hamas, and other leading Islamist currents are intransigently opposed to mass action.

Consistent with this strategy, Islamist leaders blame continued economic problems and the political impasse on unsympathetic elements within the regime and on 'internal colonialism' - ethnic minorities, secularists and Communists. They encourage pointless and divisive attacks on imagined enemies, drawing the Islamist current as a whole further into conflicts in which military and bureaucratic networks, and regional and family ties are the basis for factional struggle.

The most ruthless and powerful factions - those based within the army - are thus easily able to implicate the Islamists in their own savage battles for influence. Mass killings become a smokescreen behind which the fight for control of the regime, and for the country's oil wealth, continues. Western governments have been content to ignore the cost in suffering.

Many socialists look at Algeria and see only the despair of workers who are abused by the state and treated with contempt by the Islamists. It is well to remember the constant renewals of mass struggle which have taken place since the 1960s, especially the uprising of 1998. This was a vivid reminder of the power of north African workers, which shocked the regime and the Islamist leadership in equal measure. There are certain to be further such struggles. It is here that Algerian socialists who are not hindered by the disastrous strategies of a long-decayed left will be able to find a future.

Phil Marfleet


Israeli prime minister Benjamin Netanyahu delivered a rebuff to his country's paymaster, US president Bill Clinton. Clinton had summoned Netanyahu and Palestinian leader Yasser Arafat to Washington in a desperate effort to keep the Middle East peace process on track. But Netanyahu's determination to destroy the peace process was plain.

Netanyahu's intransigence comes against deepening splits in Israeli society that were highlighted by the general strike, called by the Histradut trade union federation, last December. The strike was provoked by Netanyahu's finance minister Yaakov Neeman, a founder of the fanatical Gush Emunim settler movement and a hard line monetarist who launched an attack on pensions, health and welfare.

The 700,000 strong general strike which followed shut down government buildings, banks, airports and even the stock exchange, and forced the government to withdraw its attack on pensions. However, this defeat did not stop the determination to slash wages and social benefits. When foreign minister David Levy threatened to resign over the cuts, Neeman responded by saying Israel's unemployed should do the jobs currently occupied by migrant labour from Thailand. Thai workers replaced Palestinian labourers and their pay is far below the legal level for Israeli workers.

When Levy did resign Netanyahu was left absolutely dependent on the votes of the small extreme right wing and religious parties whose every demand for houses, schools etc, were met. Netanyahu claimed these concessions did not undermine his budget, but he spent every penny in the reserves to pay off his coalition allies.

Around 100,000 Israeli students demonstrated last month and clashed with police over the handouts to Jewish fundamentalists. Splits and discontent seen on the picket line and on the streets in recent weeks are evident everywhere. Conflict between secular Israelis and fundamentalist Jews trying to forcibly impose observation of the sabbath is getting increasingly bitter. The main political parties are as split as the country itself. Netanyahu faces constant plotting within his Likud party, and the opposition Labour party is fractured by rivalry between the current leader, Ehud Barak, and the man he ousted, Shimon Peres.

As Israel approaches May's 50th anniversary of its founding, what then does the future hold? It is wishful thinking to see the recent strikes and student unrest as a sign that the mass of the Israeli working class was moving towards some sort of unity with the Palestinians. These struggles were a challenge to the government but not to the state itself. Israel has been hit by such conflicts before and the main beneficiaries were right wing parties like Likud. This time round parties even further to the right are expecting to pick up disappointed Likud supporters. Labour's attitude to the Palestinians is as brutal and unyielding as the current government's.

The sight of Israel divided against itself is important for those who have argued that the country does not represent all Jews and that the creation of a Jewish state was not the answer to the anti-Semitism. In the short term, however, a divided Israel does not bring peace in the Middle East any closer. We will see greater repression of the Palestinians.

Discontent in Israel may offer a little space in which some Israeli workers begin to develop some socialist, internationalist politics, but it will be a long slow process. Meanwhile, the Middle East is remains drenched in blood.

Mike Simons


The escalation of horrific sectarian violence and the renewed threat of all out war has marked the first month of 1998 in Northern Ireland. There is a real possibility that the peace talks will now collapse.

The government's Unionist-inspired 'blueprint' for peace began to come unstuck within a week of its announcement. Tony Blair and Mo Mowlam claim their policy is justified in order to try to keep everyone on board the peace process. But in reality they have appeased the Unionists, and in doing so have strengthened the hand of the Loyalist paramilitaries who want to wreck the peace

The 'blueprint' document, although just 600 words and very vague, rules out the prospect of even a transition to a united Ireland. Instead it copperfastens partition and takes up Unionist David Trimble's own proposal for a 'Council of the Isles'.

The death squads of the Loyalist Volunteer Force stepped up their murderous activities after Northern Ireland secretary Mo Mowlam's talks at the Maze prison with the Ulster Freedom Fighters, an organisation responsible for the massacre of hundreds of Catholics. These sectarian thugs are encouraged by the talk of the so called 'respectable' politicians at the top of the Unionist parties. A leader of the PUP, one of the smaller parties linked to the paramilitary UVF, spoke of the involvement of 'seemingly respectable politicians' after the recent murder of Catholic community worker Terry Enright. 'I am absolutely convinced that the LVF do not operate alone and indeed are assisted by more than one group, and I am not talking about paramilitary group assistance,' he said.

New Labour's election last May raised the hopes of many people in Northern Ireland, both Catholic and Protestant, for a new impetus in the search for peace. They hoped Labour would face down the threats of the Unionists and their Orange thugs. Labour's failure to do so has fuelled sectarian hatred and increased the likelihood of more bloodshed in the future. So why has Blair allowed the Loyalists to dictate the future for Northern Ireland?

The answer lies in the very nature of the peace process itself. The government is trying to find a solution without tackling the fundamental cause of sectarian violence - Britain's partition of Ireland into two states in 1921. That failure has been the reason every previous attempt to find a solution has ended in failure.

Its history of concessions to Orangeism illustrates how the British ruling class lacks the political will to dismantle the Orange state, even if it is in its own long term interests to find a solution and get out of Ireland. Tony Blair made this clear just two months into his government when he unequivocally backed partition, ruling out a united Ireland in his lifetime.

None of the various peace proposals have sought to end sectarian divisions. The assumption has always been that Protestants and Catholics cannot live side by side. Yet Orangeism is weaker than ever today. Its base has been undercut by economic crisis and it is fraught with splits and divisions. This fragmentation has led to increased questioning of the old Loyalist assumptions and growing anger among Protestant workers at the middle class Unionist leadership. Now the Orange Order can no longer pretend to buy loyalty by promising secure jobs and preferential housing for Protestant workers. All the Orange establishment has to offer are the hollow symbols of Protestant supremacy and the naked terror of the Loyalist murder gangs.

Unfortunately Sinn Fein, the main opponent of Orangeism, has followed a cross-class, nationalist strategy which has little to offer Protestant workers. Its 'pan-nationalist' alliance with the SDLP, the Irish ruling class and US president Bill Clinton which has underpinned Sinn Fein's strategy has yielded no tangible results. Gerry Adams and Martin McGuinness have found themselves trapped in a failing peace process which looks increasingly unlikely to find a settlement, let alone one which would be acceptable to its own supporters.

There is an urgent need for socialist politics which can offer a real alternative. It was revulsion from below at sectarian killings which was the main impetus behind the peace process and the IRA and Loyalist ceasefires in 1994. The vast majority of Protestants and Catholics alike dread the return to war. The tragedy is that socialist organisation is so far too small to gain a wider hearing.

The hope is that the fragmentation and divisions among the leadership of the Orange Order will continue to also create splits along class lines which can open up the possibilies for socialists.

Hazel Croft

Liverpool dockers

The end of the Liverpool dockers' dispute after over two years has been greeted predictably by the Blairites and their supporters in the media. According to them it marks the last gasp of old Labour. The dockers, we are told, stayed out on strike through a mixture of arrogance and pride, a sort of pigheadedness out of place in the modern, world of New Labour.

That is not how it looks to many working class people. The thousands who heard the striking dockers speak, the many more who gave to collections for them, those who raised resolutions in their support in union branches around the country and throughout the world, know that the dockers' strike was about defending jobs and union organisation. Their failure was brought about by the lack of support from their national union, the TGWU, and by the refusal of a Labour government to use its influence to force the company to back down.

But the legacy of the dispute will be different from Rupert Murdoch's victory at Wapping, for example. That had the effect of dampening class struggle. After Wapping, employers everywhere felt confident to go on the offensive. Today, they do not feel they can get away with this sort of behaviour. Workers do not feel cowed and defensive in the way that they did after the miners' and printers' defeats. Even the employers know that Liverpool represents not a last gasp but a much wider feeling among the working class. The support for long running disputes such as Liverpool and Magnet has not diminished but has become symbolic of the sense of collective solidarity inside the working class movement.

The real crime is that the supposedly 'old Labour' trade union leaders have repeatedly acted to prevent these feelings of solidarity turning into real action - both over the dockers, when blacking could have easily won the dispute, and over issues such as pay or the minimum wage. The anger growing over Blair's attacks means that workers will also find themselves increasingly in conflict with the union leaders, who still refuse to organise a fightback.

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