21.02.2002

Brazen arrogance

"Garbagegate", "a yawnathon", "hysteria overload", "crashingly dull". These were just some of the derisory phrases deployed by Blair and his spin doctors in a fruitless attempt to deflect attention from the latest of New Labour's 'cash for favours' scandals. Now the name of Lakshmi Mittal can be added to those of Bernie Ecclestone and the Hinduja brothers (to name but two cases) in the list of those Labour Party donors who have benefited handsomely from Blair's "business-friendly" approach. Since the story broke we have seen a sorry tale of lies and half-truths, not to mention the crass ineptitude of men who are paid large sums of money, some of it from the public purse, to pull the wool over our eyes. Part of the problem was that at a crucial moment 'president' Blair was away solving the problems of Africa. Another fine mess they got him into. The difference on this occasion is twofold: first, the sheer brazen arrogance that characterises Labour's second term contrasts markedly with the show of humility we got when the Ecclestone affair blew up shortly after Labour's 1997 landslide. It was, of course, pure coincidence that Ecclestone's £1 million donation to the party led to his Formula One interests being exempted from the ban on tobacco sponsorship. Gordon Brown demonstrably lied about his knowledge of the matter; but Blair said sorry and returned the tainted cheque. Not this time. Secondly, on this occasion, the smoking gun was actually in Blair's own hands, which perhaps explains the frantic efforts by Downing Street to bury the whole thing in a farrago of disinformation. The Metropolitan broadsheets have made predictable hay out of the affair but, huff and puff as they will, The Daily Telegraph is unlikely to achieve its goal of a public enquiry into what Iain Duncan Smith (correctly, as it happens) dubs a "trail of deception". Memories may be short, but it is still a little too early for the Tories to make much political impact with accusations of sleaze. The public reaction is likely to be one of weary cynicism, to the effect that 'They are all the same', as indeed on one level they are. A pity in some ways, because Blair's antics make the receipt of plain brown envelopes by some pathetic Conservative black sheep look like decidedly small beer. The facts are eminently straightforward. Mittal, an Indian citizen, who spends a few days each year in his £6 million summer palace on Hampstead's Bishop's Avenue, is a billionaire whose fortune is based on steel. On May 27 2001, as an individual rather than corporate donor, he gave £125,000 to the Labour Party. This was not his first gift. In 1997 he had sent the party a more modest cheque in the sum of £16,000. His wife, Usha, as it turns out, was also a generous donor to the election expenses of a certain Mr (ex-minister for Europe) Keith Vaz MP, whose equivocation and prevarication on the subject of inter alia his links with Asian business interests have led to his suspension from the House of Commons. After Labour's victory, Mittal was one of a select group of donors who had the great honour of meeting Tony Blair at a party thrown by Labour's fund-raiser in chief, Lord Levy. On July 23 Blair signed a personal letter to the Romanian prime minister, Adrian Nastase, backing Mittal's bid to buy the Sidex steel plant in Galati. The deal was duly concluded in October to the evident satisfaction of all parties, especially Mr Mittal. Only later, as we shall see, did the extent of Blair's gratitude to Mittal become apparent, through the aegis of the European Bank for Reconstruction and Development (EBRD), which contributed some $100 million (£70 million) to the total £300 million cost of the deal, £6 million coming straight out of the pockets of UK tax-payers. So much for the facts - what about the lies? On February 13 in the Commons, Blair described Mittal's LNM group of companies as "British". Wrong. With metal and other interests ranging from Canada to Kazakhstan, from the USA to Zambia, LMN employs some 125,000 workers, of whom around 100 (less than one tenth of one percent) work in Britain - a handful at LMN's smart corporate office in Berkeley Square, the remainder at a small metal-bashing factory in Kent. LMN is actually registered in the Dutch Antilles, a well known Caribbean tax haven, from which Mittal and his acolytes run the group's transcontinental operations. Small wonder, therefore, that in the light of information readily available to the public, the Downing Street spin machine was forced into a series of embarrassing and inconsistent retractions: first, "British-based" (another lie) and then "a company with British links", a term so opaque as to cover practically any contingency, but still deeply misleading. At first we were told that this perfectly routine letter occupied only 30 seconds of the prime minister's valuable time on one of his increasingly brief sojourns in London. Depending on which version you read, the letter was either drafted by Richard Ralph, Britain's ambassador in Bucharest (who will neither confirm nor deny his authorship), or by some nameless figures in the foreign office. We are informed that Blair knew nothing of Mittal, despite the fact that the man was one of the most conspicuous personal donors to New Labour last year. At first we were told that they had never met, then that they "may" have met at various functions, but certainly that no "bilateral" meeting between them had ever taken place. Presumably the fact that references to Mittal as a "friend" of the prime minister in the original draft of the letter were expunged by Blair's chief of staff, Jonathan Powell, or one of his myrmidons caused it to remain entirely outside our leader's consciousness? He is, after all, a very busy man, what with helping coordinate president Bush's global 'war against terrorism' and solving the problems of the rest of the world when he can find the time. Whoever drafted it, the letter that Blair signed was in itself something of a bribe, for it contained the clause that Romanian acceptance of the Mittal offer would set that country "firmly on the road to membership of the EU" and with it a positive cornucopia of loans, subsidies and other benefits, an offer that one would be foolish to refuse (The Times February 18). The actual text of the letter came to light not from any official British source, but from a Romanian website trawled by a researcher from Plaid Cymru, whose industry spokesman, Adam Price, played a key role in exposing the deal, which otherwise we might never have heard of. If Blair had taken the time to look into the activities of LMN he might have acted differently - or would he? He could, for example, have examined the group's record in Ireland. Back in 1995 Mittal bought the entire, formerly state-owned, Irish steel industry for a nominal sum of £1. Six years later, only months before his bid for Sidex, Ispat Steel (Ireland), one of Mittal's numerous assets, went bust. It still owes hundreds of thousands of pounds in unpaid VAT and bills to its creditors, none of whom, when the expensive legal wrangling is over, expects to receive a penny in the pound. Hardly surprising, therefore, that the Romanians wanted some kind of assurance as to LMN's bona fides. Blair's letter put their minds at rest, to say nothing of the EBRD loan. Clare Short, as minister in charge of the department for international development, signed an instruction to John Kerby, the UK's representative at the EBRD, to promote Mittal's bid for Sidex and back it up with hard cash. Only the American representative demurred. Short was reportedly "livid" about reporting of the EBRD's involvement: "It is not the job of the EBRD to promote British companies. It is our job to promote the reform and going forward of the former communist countries" (The Times February 18). Exactly. The job of the EBRD, for which it was specifically founded, is to lend money to capitalists so that they can buy up former Soviet and east European assets at bargain basement prices, install some new plant financed by grants and loans, and then extract the maximum surplus value by using cheap labour. The average wage of Sidex workers is around £25 a week. Mittal certainly got a bargain. To begin with, the Romanian government obligingly wrote off some £630 million of outstanding debt. As if that were not enough, the Nastase government also undertook to exempt Mittal from import charges on raw materials and new equipment for five years, with no taxes on profits for the same period. Ispat Sidex, with some 27,000 employees in Galati, despite its archaic infrastructure, is the biggest sheet metal producer in eastern Europe (excluding the former USSR) and accounted last year for around five percent of the country's GDP. Some 150,000 further jobs in supply and ancillary activities also hinge on the continued existence of Sidex. No wonder that the Romanians were so keen to accept the Blair/Mittal offer. As one spokesman of the EBRD put it, "We did not wish to spoil the party" by drawing unnecessary attention to the terms of such a lucrative deal (The Sunday Telegraph February 17). Having failed in Ireland, Mittal, with his successful investment in Kazakhstan in mind (another venture funded in part by the EBRD) obviously decided to go east in quest of riches. But there is the small problem of the current glut in steel that has depressed prices across the world and led to many thousands of job losses, not least in Corus (formerly British Steel). Acutely aware of the pressures of competition, our "British" friend Mittal, who happens to own the sixth largest steel producer in the USA, spent the best part of £500,000 last year lobbying the Bush administration to introduce import tariffs on steel imports, a move which, if implemented, would have serious effects on Britain's £250 million pound US steel export market. How should we, as communists, orient ourselves in approaching this whole tawdry business? That it is yet another nail in the coffin of New Labour's putative existence as in some sense a party of the working class, rather than a bourgeois party is self-evident. But we can spare ourselves the expressions of shock, horror and outrage to which the hypocritical establishment media have devoted so much ink in recent days. That is just part of the day to day game of Westminster politics. As if any of these complacent ideologues of bourgeois triumphalism and market economics really gave a fig for the plight of Romanian workers. Interesting to note in this regard, that The Telegraph group, in pursuing its case, sheds some crocodile tears over the fact that, only months since the deal was done and dusted, the Romanian government is threatening to sue Mittal for failing to pay health and unemployment insurance contributions for the Sidex workforce. Yet when it comes to the situation of workers on the railways in Britain, the talk is only of a new red threat from the RMT and other purportedly 'extremist' unions who must, obviously, be roundly condemned. Workers' jobs and rights can be defended only if they are safely abroad while contributing to a promising party political rumpus at home. Some on the left will no doubt concentrate on the fact that yet more British jobs will be sacrificed as a result of Labour's intervention on Mittal's behalf. He may not be British himself, but surely Mittal could have done something to secure the future of our steelworkers as opposed to those of 'foreigners'? We all know what has happened in Wales and elsewhere in the UK as a result of the so-called 'rationalisation' of steel production in line with world market conditions. But to argue that our workers would be better off being exploited by our 'own' capitalists, backed up by our 'own' Labour government is just a politically bankrupt, insular and nationalist - certainly not a socialist or communist perspective. Maurice Bernal