Kenya Protests: A Wake-Up Call to a Failing International Financial Architecture

By Manasi Karthik

August 21, 2024

Source: CEPR

Protesters take to the streets of Nairobi, June 18, 2024 | Image: screen grab from @BBCAfrica / Twitter



Protests ignited by recent IMF-backed reforms in Kenya show no signs of abating. Demonstrations began in June when Kenyan president William Ruto proposed taxes on essential goods including food, health care, and fuel in line with IMF-supported budget reforms. In response, Kenyan police resorted to a brutal crackdown, arresting protestors and opening fire on crowds. At least 60 have been reported dead, along with numerous allegations of police abductions and torture. Ruto has since walked back the reforms in an effort to stem a burgeoning legitimacy crisis. Still, protesters continue to call for him to resign.

The events in Kenya should serve as a wake-up call about the global debt crisis — and the inadequacy of multilateral lending in breaking the cycle of debt.

Last year, Kenya spent nearly 60 percent of its revenue on debt servicing alone. While many blame China for Kenya’s debt woes, Kenya’s debts to multilateral lenders are almost twice its borrowing from all bilateral lenders, combined. But the country’s increasing reliance on multilateral lenders hasn’t enabled it to escape vicious cycles of indebtedness.

In 2021, the IMF’s response to the economic devastation caused by the COVID-19 pandemic included an issuance of $650 billion of Special Drawing Rights (SDRs).1 SDRs can be thought of as a kind of currency that the IMF issues to its member countries. They constitute the most meaningful support developing countries have received from the Fund since the beginning of the COVID-19 pandemic. SDRs provided developing countries, including Kenya, with immediate and unconditional relief. Kenya received $738 million of the IMF’s 2021 SDR issuance which it used to support public spending during the pandemic, including for critical public health and social protection financing. However, Kenya’s quota-based allocation was nowhere near enough to meet its spending needs.

That same year, Kenya entered into an additional agreement to borrow $2.4 billion, with policy conditionalities, from the IMF over the next three years. This has since been increased to $3.6 billion. As part of the agreement, Kenya is subject to periodic IMF reviews. In January, the Fund advised Kenya to increase revenue collection through taxes, and two weeks before the protests erupted, endorsed a program of regressive taxation. The IMF has also been pushing privatization since 2023, focusing on the sale of state-owned energy and manufacturing companies.
Multilateral Lending Doesn’t Help Countries Break Free of Debt Traps

As of last August, more than a third of the world’s countries were facing debt distress; some experts consider that we are in the midst of the “worst global debt crisis ever.” On average, emerging and developing economies allocate 42 percent of revenues to servicing debt. Debt-to-GDP ratios in these regions are upward of 55 percent.

Multilateral lending doesn’t often come with favorable terms. During the first five months of the COVID-19 pandemic, over 90 percent2 of IMF loans to emerging and developing countries were non-concessional. In addition to interest payments and other fees, the IMF imposes onerous surcharges on highly indebted countries. This year, Kenya joined the growing list of countries paying IMF surcharges. This puts the IMF’s effective lending rate3 to Kenya at over 7 percent. Over the next decade, Kenya will pay the IMF an estimated $174 million in surcharges alone. The IMF’s quota-based system creates a double-whammy: countries that face significant financing needs receive relatively little assistance before maxing out4 on their quotas and being subjected to surcharges.

Multilateral lending hasn’t helped countries break free of the debt traps they face. In Kenya, multilateral support allowed the country to narrowly avert default. While this has allowed Kenya to hold on to its hard-earned reserves, it now has to pay increasingly punitive rates to private lenders. Kenya recently used a World Bank loan to settle a $500 million payment on a Eurobond maturing in June. It then used IMF funds to trade in a 6.875 percent Eurobond for a new Eurobond issuance of $1.5 billion at a 10.375 percent coupon rate. These interest rates vastly outstripped growth projections even before the protests, and are likely to push Kenya even further into a cycle of indebtedness.

The World Bank and IMF champion capital markets as a tool for financing development, but these markets can be deeply irrational and predatory. Despite flagging debt sustainability indicators, investors are more than willing to lend to countries at risk of debt distress, albeit at increasingly high rates. Just this year, the anticipation of Fed rate cuts has fueled a wave of new bond issuances among African countries, with African bonds being massively oversubscribed. Kenya’s $1.5 billion issuance received three times as many orders as the amount offered, and Benin’s issuance was oversubscribed by six times. Similarly, Cameroon issued a new bond at double-digit rates on the heels of an IMF review applauding its budget discipline. Yet, this increased investor appetite has not resulted in more favorable borrowing costs. Africa is now experiencing the highest borrowing costs it has seen in a decade, and investors can expect yields from African sovereign debt to be 2.6 times higher than similarly rated countries. Markets cannot provide the sustainable sources of financing imperative for economic development.
International Debt Resolution and the Way Forward

The alternative to refinancing debts on capital markets is a restructuring under the G20 Common Framework. This is a slow and painful process; Zambia’s restructuring under the framework took over three years. After private lenders refused to participate on comparable terms, the result was merely an extension of Zambia’s interest payments, with no reduction on the principal. During this period, a deadly drought also wreaked havoc on the Zambian economy.

Many countries in dire need of debt relief don’t qualify for the G20’s Common Framework. Sri Lanka defaulted in 2022 but didn’t qualify for the Common Framework and hasn’t been able to renegotiate its debt payments. The IMF offered $3 billion to bail Sri Lanka out of more than $30 billion in debt, conditioning the funds on Sri Lanka’s negotiation of deals with its other creditors. Despite reaching an agreement with bilateral lenders, private creditors continue to obstruct resolution, putting the IMF bailout at risk. In addition to the billions of dollars in regular interest and principal payments owed to the IMF, Sri Lanka is expected to pay the Fund $308 million in surcharges over the next decade.

Following the onset of protests, Kenya’s currency has been devalued, its credit ratings have been downgraded, and the World Bank has cut its growth forecasts. Losses from this year’s floods are already estimated at over $300 million. Without bold and immediate action, the debt crisis will push Kenya and many other vulnerable countries further into economic instability, social unrest, and climate vulnerability.

The United States’ strong economic recovery has been supported by expanded public spending and an interventionist green industrial policy. In contrast, multilateral lenders are responding to the unfolding debt crisis in the Global South with failed neoliberal policy prescriptions. We cannot adequately respond to the unprecedented crises of our time with empty paeans to market-led growth. The choice before us is clear: we can either address the injustices of the international financial architecture, or face a world of increasing instability and crisis.

A new issuance of SDRs can provide crucial liquidity to countries in crisis. SDRs boost creditworthiness, reduce borrowing costs, and can be used to repay IMF loans. They can also be exchanged for hard currency and used to buy back bonds. Eliminating surcharges would also be a welcome development, and provide debtor countries with much-needed fiscal space. However, sustainably addressing the scale of the present crisis will take a more fundamental reform of the global financial architecture, including an international debt resolution mechanism that compels all creditors to participate equally in a restructuring process that offers real relief to debt-distressed countries.
NotesSDRs are an international reserve asset that can be exchanged for hard currency among member countries and select prescribed holders, such as regional banks. Their value is based on a basket of five currencies: dollars, euro, pounds, yen, and renminbi.
Author’s calculations based on figures provided in Table 2.
Kenya is now paying level-based surcharges to the IMF because it has exceeded 187.5 percent of its quota. This adds 200 basis points to its lending rate.
Surcharges are imposed when countries exceed 187.5 percent of their quotas.



Manasi Karthik a Summer Fellow on the International Team at the Center for Economic and Policy Research in Washington, D.C. Her research at the intersection of climate and international political economy explores climate and infrastructure finance, industrial policy, sovereign debt, and land and forest rights. She holds an M.A. in Anthropology and Development from SOAS, University of London and an M.A. in Sociology from Johns Hopkins University, where she is now finishing her Ph.D.

 

Piñon Dark Horse Fire Reveals How Oil Industry Environmental ‘Solution’ Spurs Climate Crisis

NM explosion shows how taxpayers can end up paying huge subsidies to carbon capture operations that drive far more climate-altering pollution than they prevent.

By Sharon Kelly

August 21, 2024

Source: DeSmog

Fire at the Piñon Midstream Dark Horse carbon capture project in Jal, NM, on November 25, 2023. Credit: New Mexico Environment Department

The trouble began at Piñon Midstream’s Dark Horse Treating Plant in Jal, New Mexico, on November 25, 2023, with an unexpected loud “pop” in the early afternoon, the company would later tell state regulators. A poisonous mix of flammable gasses hissed out from a pipeline feeding into the plant.

Within a minute, a worker radioed in to the plant’s control room that a dense cloud of vapor had enveloped part of the plant. Within two minutes, Dark Horse was ablaze in what the company would later call an “intense and sustained fire.” Within 15 minutes, more pipes ripped open, and a towering fireball tore through the plant.

Black plumes of smoke streamed over the desert and the Permian Basin shale below. An onlooker swore in Spanish as the fireball expanded across the sky, one anonymous video posted on Instagram shows. A second burst of flames erupted after dark as the fire burned on.

It was two days before the first Piñon workers, wearing firefighter-style air tanks, could approach the plant’s perimeter. It was another day before the fire was fully extinguished.

The November explosion involved some of the oilfield’s deadliest chemicals, though fortunately no injuries were reported from the fire.

The incident offers a rare window into some of the inner workings of private oil companies while also revealing how taxpayers can wind up paying enormous subsidies to carbon capture and sequestration (CCS) operations that generate far more climate-altering pollution than they prevent.

‘Sour Gas’

The fuel feeding into Dark Horse on the day of the explosion was a particularly dangerous mix, made up of methane gas, carbon dioxide (CO₂), other fossil fuels, and poisonous hydrogen sulfide (H₂S) gas — a toxic blend that oil companies nicknamed “sour gas” and “acid gas” due to the sulfur-like odor of hydrogen sulfide and CO₂’s ability to acidify water. Dark Horse is designed to remove and dispose of the hydrogen sulfide and carbon dioxide contaminants so the rest of the gas can be sold. The company markets itself as the largest such project in New Mexico.

Dark Horse’s anchor shipper is Ameredev II, a private-equity backed driller that’s one of New Mexico’s top 25 oil producers. In June, Matador Resources (NYSE:MTDR) announced plans to acquire Ameredev II for $1.9 billion in cash. As that deal was announced, Matador management acknowledged Ameredev II’s oil production saw disruptions at the end of 2023 due to “issues” at Piñon.

State production data shows Ameredev II’s New Mexico oil production abruptly dropped by over 400,000 barrels a month in the Dark Horse fire’s aftermath — a roughly 80 percent dive.

That’s enough oil to create roughly 18 times as much climate-altering CO₂ pollution as the plant would have captured if it was up and running, a review of company filings and EPA emissions data by DeSmog finds.

This summer, just seven months after the fire ripped through Dark Horse, the EPA approved a key “monitoring, reporting, and verification” plan for the project — a key step in enabling the company to claim carbon capture tax credits that could be worth over a quarter of a billion dollars.

Tax credits for Piñon would be another way that CCS incentives are being used by the oil and gas industry to fuel fossil fuel development.

The EPA’s 712-page approval makes no mention of the plant’s safety record, the fire, or its causes.

When contacted by DeSmog, Piñon Midstream declined to comment.

Oil Unleashed by Dark Horse

Sour gas is a growing curse for the oil and gas industry. “As oil and gas wells age, the H₂S levels of fields where they are located may increase,” the Texas Commission on Environmental Quality (TCEQ) warns.

Some in the industry are already citing estimates that “40% of natural gas reserves are sour, with 20% being so sour they can’t be economically or technically accessed.”

Certain oil wells also produce high levels of carbon dioxide gas — not the byproduct of burning oil, but carbon dioxide that was naturally trapped below ground or injected by drillers for enhanced oil recovery. And when carbon dioxide and H₂S come into contact with water, they can form corrosive acids. And there’s a lot of water involved when you drill shale oil — both the salty brines that were previously trapped underground alongside the crude and the enormous volumes of water injected underground during drilling and fracking.

Producers tend to avoid sour gas-tainted oil because when there’s enough H₂S and CO₂ in the mix, you need specialized equipment to remove those deadly and corrosive gasses. That adds costs and creates a single point of failure that can throw a wrench in production from multiple wells.

A small handful of Permian drillers nonetheless seem determined to tap oil deposits contaminated with particularly high levels of sour gas, reserves hazardous or expensive enough to scare off other producers.

Piñon offers a uniquely important service for those drillers. The Dark Horse plant is designed to siphon off carbon dioxide and hydrogen sulfide, turning gas considered too sour to sell into a “sweetened” fossil fuel blend that pipeline companies will accept for shipment. Dark Horse “unlocks previously challenged resource development” in Lea County, New Mexico, and in Texas’ Winkler and Loving counties, Black Bay Energy Capital, a private equity company backing Piñon, says on its website.

The company injects the removed carbon and hydrogen sulfide waste deep underground, via a pair of disposal wells — meaning that even though it doesn’t get its carbon from burning fossil fuel, what Dark Horse does is considered carbon capture and sequestration.

Piñon markets Dark Horse as part of the fight against climate-altering pollution. “Not only does our project provide a comprehensive solution for sequestering CO₂ and H₂S,” Piñon Midstream co-founder Steven Green said as construction of the plant kicked off in April 2021, “it also substantially reduces flaring and greenhouse gas emissions in southeast New Mexico.”

Supporters of CCS have predicted that tax credits — massively increased when the Inflation Reduction Act became law in September 2022 — will ultimately aid the fight against climate catastrophe. By creating a market for carbon, companies burning fossil fuels for power or working in “hard to abate” industries will be incentivized to capture their carbon emissions, ultimately reducing climate-altering pollution, advocates say.

So far, that’s not what’s happening. Instead, most of today’s captured carbon comes from natural gas processors like Piñon. “The majority of CO₂ being captured today is not captured from power plants or industrial processes like steel or cement, which is how CCS is often marketed,” a November 2023 report from Oil Change International found. “Instead, 67% of CO₂ captured today comes from gas processing plants.”

Credit: “Carbon Capture’s Publicly Funded Failure,” Nov. 2023, Oil Change International

What many natural gas processing plants are doing, in other words, is essentially rebranding a long-standing way of disposing difficult oil waste into a climate solution. “It looks like acid gas injection to us,” attorneys from the law firm Alston & Bird wrote in a 2008 post about a CCS project in Michigan with plans to inject CO₂ and H₂S into disposal wells, “and folks have been doing that for decades.” 

Turning a Blind Eye to Emissions

Dark Horse has historically tended to capture under 10,000 tons of CO₂ a month, data from the company’s state and federal filings show.

But that doesn’t mean Dark Horse reduces greenhouse gas emissions. The November incident offers an unusual chance to see just how much monthly oil production Dark Horse underpins — and how much carbon pollution that oil creates.

After Dark Horse was forced offline, oil production in New Mexico from its anchor shipper, Ameredev II, plummeted.

Credit: New Mexico Energy, Minerals and Natural Resources Department Oil Conservation Division monthly reported oil production data (barrels per month). Design by Sharon Kelly

The month before the blast, Ameredev II produced over a half million barrels of oil, state records show; the month after, it produced just over 100,000 barrels — a reduction of about 424,000 barrels a month.

That’s enough oil to produce over 182,000 metric tons of CO₂ emissions, using EPA conversion formulas — over 18 times the amount of carbon Dark Horse would have captured over the same amount of time.

Carbon capture tax credit programs simply turn a blind eye to those additional — and far larger — emissions from burning those fossil fuels.

The EPA generally doesn’t track how much CO₂ is created by the oil and gas a project enables or compare that to the amount of CO₂ sequestered when they approve carbon capture monitoring plans, Preet Bains, a research analyst for the Environmental Integrity Project who authored a December report titled “Flaws in EPA’s Monitoring and Verification of Carbon Capture projects,” told DeSmog.

“We don’t really have that information,” she said. “It’s really just looking to see how much CO₂ did you inject and do you have a way to verify that. It’s not about even preventing leaks necessarily. There’s no requirement that says, okay, if you have a leak, you have to plug it in this amount of time.”

Company IRS filings aren’t public, so researchers can’t say how much individual companies that qualify for the 45Q tax credit have actually claimed. Based on Dark Horse’s current maximum permitted capacities, at $85 per ton, Piñon’s CCS tax credits could be worth up to $255 million over the credits’ 12-year life-span.

Environmental and taxpayer watchdogs often fault subsidies for CCS projects because they enable more fossil fuel production under the guise of fighting greenhouse gas emissions – but the 2022 Inflation Reduction Act nonetheless significantly boosted subsidies under the 45Q tax credit program. Enhanced oil recovery projects, where captured carbon is used to revive the flow of oil from aging oil wells, now qualify for lower tax credits of $60 per ton, while those that dispose of carbon other ways can receive $85 per ton.

In other words, Dark Horse may qualify for significantly larger tax credits because, unlike many other carbon capture schemes, the company’s captured carbon isn’t used for enhanced oil recovery.

But federal regulators do recognize the company’s ties to the oil industry in one regard. Piñon is allowed to use cheaper disposal wells (Class II injection wells, intended for oil and gas waste, rather than Class VI wells, specifically designed for carbon sequestration). Class II wells tend to be cheaper to build than Class VI wells and take less time to permit.

“The rules are definitely a lot more lax for Class II wells,” Bains said.

It all adds up to more reasons why experts and analysts increasingly fault carbon capture tax credits for subsidizing oil and gas production in the name of fighting the climate crisis.

“If your purpose in encouraging CO₂ injection is to reduce the amount of CO₂ that’s going into the air,” Bains said, “it’s counter productive to subsidize an industry that’s going to produce more oil and gas and put more CO₂ into the air.”

A Fire That Never Happened?

Piñon’s Dark Horse plant is located on a dirt road off a dirt road off a third dirt road, west of Jal, N.M., with the nearest “occupied structure” listed in state records almost two miles (3,000 meters) away from the site.

The majority of the roughly 1,400 people living within a 10-mile radius of Piñon’s Dark Horse facility are people of color, according to state records.

The November blaze seems to have drawn very little official response.

On the day of the fire, local police and firefighters withdrew from the scene without attempting to extinguish the fire amid fears of potentially deadly fumes. The only potential mention of the blaze in the remote oil town’s local newspaper was a single four-word entry in a police blotter: “Fire (structure) Hwy 128.” 

State environmental regulators never visited the site following the fire and, as of late July, said staff had not yet reviewed key documents related to the blaze or determined if the company should face fines or violations. State records show Dark Horse has never been inspected.

Because the inferno caused over $1 million in property destruction, the federal Chemical Safety and Hazard Investigation Board (CSB) was notified — but the only publicly available documentation was a single row in a spreadsheet listing reports received by CSB. CSB failed to respond to questions about the event or to say whether federal regulators were investigating.

Dark Horse uses amine as it siphons off H2S and CO₂. For decades, federal regulators have recognized the hazards involved with amine processing. “On July 23, 1984, a refinery at Romeoville, Illinois, owned and operated by the Union Oil Company of California, experienced a disastrous explosion and fire,” according to a 1986 OSHA memorandum. “An amine absorber pressure vessel rupture released large quantities of flammable gases and vapors. Seventeen lives were lost, seventeen persons were hospitalized, and more than $100 million in damages resulted.”

Piñon indicated to the New Mexico Environment Department (NMED) that the November fire had been caused by an “act of god,” NMED communications director Drew Goretzka told DeSmog. As of July, state regulators had not yet reviewed those claims.

DeSmog obtained those NMED files via a public records request. In the documents, the company pointed to a cracked piece of pipe as the suspected initial cause of the leak, but suggested the company had no way of knowing the pipe might fail.

“The identified imperfections are believed to have been present since casting by the manufacturer and are located within the metal (i.e., inside the material itself),” the company wrote.

Photo of a cracked 4-inch diameter “y-strainer” pipe segment that Piñon told regulators was a suspected source of the gas leak leading to the November 2023 Dark Horse fire. Source: New Mexico Environment Department.

Piñon told regulators that “the imperfections are not visible on the surface and would not have been visible or identifiable through normal maintenance, inspection, or any other planned process.”

If that’s the case, it’d be hard to say whether or not other questionable pipe might be installed at the newly built plant.

Piñon declined to comment when asked what steps the company has taken to prevent another fire. 

In the months since the fire, environmental regulators have been actively involved with Dark Horse in at least one way: In February, regulators approved an air permit allowing Piñon to expand its Dark Horse operations significantly.

‘A Strong Smell of Sulfur’ 

Before Dark Horse was built a few years back, NMED inspectors caught Ameredev II illegally dumping unsellable sour and acid gas by burning it off or letting it escape into the air.

“Upon arrival we both noticed a strong smell of sulfur,” two New Mexico state inspectors reported, describing a December 2019 visit to an Ameredev II site. “We inspected the facility from outside the premises and a worker came out beyond the fence line to meet with us. He told us the gas plant was no longer taking their gas; therefore, they were flaring all of it.”

Sour gas has been the bane of oil producers for generations. The natural gas burned in home furnaces and gas stoves carries the sulfuric stench of mercaptan, a gas added to alert sensitive noses to the presence of the fuel. But when natural gas at the oil well carries a similar rotten-egg smell, it can mean the gas is laced with H₂S.

H₂S gas is dangerous stuff. After carbon monoxide, it’s the deadliest gas for U.S. workers, killing 46 people on the job from 2011 to 2017, according to a 2019 Bureau of Labor Statistics report. Hydrogen sulfide played a major role in mass extinction events hundreds of millions of years ago, a 2023 study of shale from the Bakken formation in North Dakota found. The gas is deadly enough that during World War I, the British Army tried using it for chemical warfare.

“After a while at low or more quickly at high concentrations, you can no longer smell it to warn you it’s there,” OSHA warns. “It can quickly, almost immediately, overcome unprepared workers, including rescue workers.”

New Mexico regulators were so alarmed by what they found at the Ameredev II sites that two New Mexico cabinet secretaries later took the highly unusual step of writing to the company’s private equity backer, EnCap Investments. The June 29, 2023, letter states the secretaries’ findings raised “questions about the adequacy of the resources provided to Ameredev in support of their operations and necessary institutional controls.” 

The state also began investigating other company locations. “A preliminary review of Ameredev’s other facilities suggests that there may be similar problems across the company’s portfolio,” regulators wrote at the time.

That 2019 visit eventually led to the largest settlement in New Mexico Environment Department history, with Ameredev II agreeing in April to pay the state $24.5 million.

“Ameredev willfully ignored basic tenets of New Mexico’s Oil and Gas Act that have been on the books since 1935,” said then-New Mexico Energy, Minerals and Natural Resources Department secretary Sarah Cottrell Propst, “not to mention the state’s nation-leading rules to prevent climate pollution that ban routine venting and flaring.” (Cottrell Propst left the agency at the end of 2023 and now works for the American Clean Power Association, a “clean energy” trade group that has been criticized for its natural gas-friendly advocacy.)

Matador and Ameredev II did not respond to requests for comment.

Piñon is deeply tied to Ameredev II. The Ameredev II Low Pressure Pipeline, owned and operated by Ameredev II, is one of just three pipelines feeding Piñon’s Dark Horse plant. “The Piñon facilities are underwritten by a substantial long-term dedication from anchor producer Ameredev II, LLC,” Piñon says on its website. Ameredev II spudded Piñon’s first injection well, Independence AGI #1, back in 2020 — before Piñon launched as a separate company in 2021 and took over the injection well.

Ameredev II has previously credited Piñon for its role in some of the company’s best wells. “Piñon’s facilities support some of the most prolific wells in the [Permian’s Delaware] basin,” Ameredev II’s chief operating officer said in 2021.

In one respect, the Dark Horse story might reflect a striking success in New Mexico’s latest efforts to curb flaring and venting, given that Ameredev II seems to have cut its oil production after Dark Horse went up in flames, rather than illegally dumping the toxic gas.

But state enforcers remain vastly outgunned by the Permian drilling machine.

The New Mexico Environment Department has an enforcement staff of six. Those six people are responsible for keeping tabs on over 55,000 facilities, resulting in “an untenable workload,” the agency wrote in a July 3 press release, adding that despite stepped up enforcement efforts in the state, “roughly one out of every two facilities inspected is in violation of federal and state rules.”

Ameredev II is also about to be under new management. In June, Matador Resources announced plans to acquire Ameredev II, along with a one-fifth stake in Piñon, for $1.9 billion in cash.

Buying Ameredev II adds 118 million barrels of oil equivalent to Matador’s portfolio, Matador said.

Ameredev II’s production dip drew questioning from stock analysts when Matador announced that deal. One analyst asked Matador to confirm that the Piñon plant caused Ameredev II’s declining oil production during the deal announcement call. Matador’s chief financial officer responded by admitting there were “issues at the end of last year and early this year,” adding “but I think largely those have been rectified.”

“We think it’s going to be a very profitable business for us,” he said of Piñon.

Matador leaders have more recently emphasized that the company wants to “stay in front” of any potential midstream problems, at least when it comes to its own ongoing operations.

“Shutting off production and curtailing production is just not an option for us,” Gregg Krug, Matador’s vice president of marketing and midstream strategy, assured investors during the company’s most recent earnings call on July 24. “That’s not what we do.”

Breaking Down the Far Right: Strategies for Resistance

By Robin Boardman

August 21, 2024

Source: Resilience


"Rise Together" Solidarity is the exciting theme of Cheryl Braganza’s vibrant painting of women marching for justice in Mumbai, India. Paired with Aaron Goggans’s (Black Lives Matter) insightful words, it spurs our dedication to forge a unified resistance against the rightwing assaults on fairness and justice. http://picturetrail.com/cherylbraganza https://aarongoggans.com | Image via Heidi De Vries/Flickr


The far-right riots last week in the UK were batted aside by many liberal commentators as an inconvenience. A spontaneous, misinformed outburst of social media and “thugs”. In reality, they were a product of neoliberalism and continued colonial racism. The combination has impoverished the majority, enriched the 1% and blamed the resulting problems on migrants. If left unchecked, the far-right will capture the weak, liberal regime and add a British far-right leader to the trend of Donald Trump, Viktor Orbán in Hungary, Recep Tayyip Erdoğan in Turkey, and Narendra Modi in India. All of these figures represent a broader shift to the right in many liberal democracies, where they manage to gain power through the very institutions meant to protect democracy.

It’s time to break down the key factors behind this rise and offer a blueprint for resistance. One that calls out the contradictions of liberalism and builds the path for a democratic revolution.
The Far Right and Liberal Democracy

Liberal democracy, with its emphasis on elections, the rule of law, and separation of powers, is often hailed as a model of governance. However, this system emerged alongside Western colonialism and has always had contradictions. For instance, while promoting freedom at home, these liberal democracies were simultaneously colonising and exploiting large parts of the world. These contradictions are exploited by the far-right to take over liberal institutions and build the keys of fascist power seen in the 1930s.

The far right doesn’t need to overthrow democracy; instead, it operates within democratic institutions, gradually turning them into tools for their agenda. This isn’t a flaw in the liberal system—it’s a feature. Neoliberalism, a form of capitalism that prioritises the free market above all else, has eroded the social welfare systems that once softened the harsh edges of capitalism. As these safety nets disappear, far-right policies gain ground, feeding off the failures of neoliberal governance.

This is what authors Vijay Prashad and Aijaz Ahmad have called the “Intimate Embrace” between Liberalism and the Far Right. They point out that liberalism often paves the way for the far right by embracing policies that undermine the welfare state, militarise society, and increase repression. This isn’t a new phenomenon—it’s rooted in the very history of capitalism.

After World War II, many believed that fascism was defeated, but Marxists recognized that the conditions that gave rise to it—capitalism’s contradictions—remained. The far right is not a relic of the past; it is a recurring response to crises within capitalism. In the last 30 years of “hyper capitalism” and ecological collapse, this threat is on the rise. Before we dive into our response, let’s make sure we know how to spot and call out a fascist power grab.
Ten Signs of Far-Right PowerManipulation of Democratic Institutions: The far right consolidates power by subtly infiltrating educational systems, government agencies, and media to normalise their ideas. They leverage wealthy backers to fund and support politicians who will champion their agenda, ensuring loyalty and advancing their goals of centralising authority.
Privatisation of State Functions: The far right supports the privatisation of state services, weakening the government’s ability to function effectively while empowering private interests aligned with their goals.
Repressive State Apparatus: The far right uses the state’s repressive tools—police, surveillance, and laws—to silence opposition and dismantle leftist movements.
Controlled Violence: The far right incites just enough violence to create fear and division but avoids enough to be directly associated with it, allowing them to maintain plausible deniability.
Appeal to Alienation: Advanced capitalism creates isolation and alienation, which the far right exploits by offering a sense of belonging through nationalism, religion, and other forms of identity politics.
Media Manipulation: By allying with private media and using social media, the far right spreads its ideas widely, creating a sense of urgency and mobilising people based on fear and resentment.
Infiltration of Society: The far right establishes itself in various social sectors, from sports clubs to religious organisations, building a mass base by exploiting majoritarian identities.
Pseudo-Populism: The far right pretends to represent “the people” against “the elites,” but in reality, they are deeply connected to the very oligarchs they claim to oppose.
International Networks: The far right is not just a national phenomenon but an international movement, with networks, like Steve Bannon’s The Movement, which operate across countries that share resources, strategies, and ideology.
Global North vs. Global South: While far-right movements in the Global North focus on defending imperialist privileges, in the Global South, they often seek to undermine sovereignty and promote instability.
Building The Democratic Alternative

Understanding these dynamics is crucial for anyone fighting against the far right. It’s not enough to oppose their policies in isolation; revolutionaries must recognize the deep connection between liberal democracy and the far right. This means building a movement that addresses the root causes of far-right politics—namely, the failures of neoliberalism and the alienation created by advanced capitalism.

Therefore we must challenge not just the far right but also the existing liberal institutions that enable it. This involves grassroots organising through local assemblies, like Cooperation Hull, that genuinely amplify people’s voices and operate independently of the compromised institutions. This shift will create real pathways to power— by building alternative institutions, organised mass protest (like rent and tax strikes), and by electing radical independents, such as Assemble candidates, who resist further cuts to public services. Community organising, such as door knocking and phone banking, should evolve from mere vote-gathering to an ongoing commitment to build participatory democratic cultures capable of facing future challenges.

Success hinges on a new communal narrative that counters the nihilistic allure of far-right ideologies. In a world where neoliberalism’s shallow individualism is failing, our resistance must demonstrate that we are not mere consumers. True community arises through confrontation, and such confrontation can only be meaningful if it is deeply rooted in the community itself. This means building solidarity across different social movements, and creating alternative institutions that can meet people’s needs without resorting to the far right’s divisive and repressive tactics.

In this struggle, it’s important to remember that the far right thrives on fear, isolation, and anger. By building a movement based on solidarity, compassion, and a shared vision of a just society, we can offer a powerful alternative to the politics of hate and division.

The fight against the far right is not just a political struggle—it’s a battle for the soul of society. By understanding the roots of this movement and organising effectively against it, we can create a world where justice, equality, and true democracy are more than just ideals, but realities for all.

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Robin Boardman is a languages student and one of the cofounders of Extinction Rebellion. He helped to lead a successful campaign to get the University of Bristol to divest its portfolio of £2m from fossil fuels and has been an XR spokesperson on various outlets such as the BBC, LBC and Sky News. He blogs at: robinboardman.com