People's Democracy

Nagen Das from London

THE British Prime Minister, who rode high in 2001, firstly by winning the general elections for the second time and then as the "US ambassador" throughout the world after the September 11 incidents, has now suddenly been woken up by harsh domestic realities.

According to the British media, the week February 10-17, has been the worst so far, for Blair during his premiership, and no one knows whetherthis is yet over - or just the beginning.

Ever since the run-up to the general election in June 2000, we have been warning in these columns of People’s Democracy, that the Labour Party in Britain, which traditionally drew its support from the working people, along with the ethnic minorities, was making a perceptible shift in its policies under Blair, who had coined the term New Labour.

The retrograde line followed by the New Labour since then is now regularly causing embarrassment to the government.

Let us look at the latest of these.

THE MITTAL STEEL AFFAIR

It has now been revealed that the British prime minister had written to his Romanian counterpart last year, urging the latter to sell his scountry's steel complex, Sidex, to the fourth largest steel manufacturing group in the world owned by INDIAN businessman Lakshmi Mittal.

This letter was written after Mittal had donated 1,25,000 pounds sterling to the British Labour Party in the last general elections. In his letter Blair suggested that Romania’s application to join the European Union (EU) would be 'helped' by the sale of this loss-making enterprise. This deal was supposed to be of the value of pounds sterling 300 million. It is now emerging that Blair had written to the Romanian Premier after the British ambassador in Bucharest had asked the British Foreign office to do so.

When this matter came out in the press - the initial argument of 10 Downing Street was that this was done to enhance British investment in Romania.

Till this time it may have appeared to be a simple deal to "please" the election donor - but it has turned out to be much more fishy than at first it appeared.

Firstly, the claim of Tony Blair with regard to it being a British investment does not hold, as Mittal Steel LNM Holdings is not a British company, is based in the Dutch Antilles, and only 80 out of its total 1,25,000 work force, are employed in Britain.

The steel arm is Rotterdam-based.

The Rotterdam holding, Ispat, in its annual report for 2000, describes itself as a global force in steel, operating in nine countries, but, surprise, surprise, Britain is not one of them.

Secondly, the British- Romanian action plan was set up by the then Minister for Europe, Keith Vaz, whose election campaign in the 1997 general election, was funded by Mittal’s wife Usha Mittal, with a donation of £ 5,000.

(Right now Keith Vaz stands suspended from the House of Commons for one month, due to his attempts to disrupt an inquiry into his finances). The Opposition Conservatives and the Liberal Democrats have called for a probe into the misleading statements by the Prime Minister describing the "LNM Group" as a British company.

At the same time, the Romanian government were anxious to know more about the status of the Mittal group, as Mittal had recently shut down an Irish steel plant, that he had bought at a knock-down price. The fact was that the acquisition of Irish Steel in 1996, was typical of LNM’s modus operandi - acquiring old loss-making mills at low prices, often involved in state privatisation schemes.

The Irish plant was formally bought by Mittal’s Rotterdam based subsidiary, Ispat International, for just £ 1, and renamed Irish Ispat. This was the reason for the Romanian government's anxiety. However it had to buckle down under pressure from Tony Blair.

Not surprisingly, British steel manufacturers are now up in arms against this deal, charging Blair with damaging "British interests". Mittal’s interest in acquiring this plant was that companies outside Britain pay tax at only 2.4 %, compared to 30 % in Britain. British steel executives have made it clear that this move by Blair was, to say the least, strange, at a time when the UK industry is in bad shape with the leader, Corus, cutting more than 6,000 jobs.

After this revelation, 10 Downing Street has made several claims all of which have been rejected by the British Press.

• THAT BLAIR WAS NOT AWARE OF MITTAL’S DONATIONS TO THE LABOUR PARTY - The truth is that Balir attended the party held in June to thank the major donors, and Mittal was one of only three Asians present.
• BLAIR’S LETTER WAS MEANT TO FURTHER BRITISH iNTERESTS - As already reported, the Mittal’s company Is not British.

Now new evidence is emerging that Britain endorsed a £70m loan by the European Bank for Reconstruction and Development to the Labour donor, Lakshmi Mittal. And Mittal used the money to fund his controversial £300m purchase of the Romanian steelworks last year.

The London Observer revealed on Sunday (February 17), that Mittal has spent hundreds of thousands of pounds lobbying the US government to add hefty tariffs to all steel imports into the US. Mr Mittal owns the Chicago-based Ispat Inland company, which is America’s sixth largest steel group.