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Views -> Mittal's Steel Bid Spurned by Racism?

MITTAL'S STEEL BID SPURNED BY RACISM?
By Lopa Patel (23 February 2006)

Lakshmi MittalPoor Lakshmi Mittal - it is not often one can say that about the Indian steel billionaire, but, it seems that his company's initial $22 billion bid for Arcelor Steel of Luxembourg has been spurned and Mr Mittal firmly believes that racism has had a part to play. He's even called upon Indian Prime Minister, Manmohan Singh, to raise the issue with French President Jacques Chirac, claiming that the steel merger would affect the wider Indian Business Community. A statement that is likely to get a mixed response from both the Indian and NRI (Non Resident Indian) Business Community in Europe. Mr Mittal's bid for Arcelor is all about Mr Mittal and nobody else.



India has never been central Mr Mittal's plans. His companies are based off-shore and steel manufacturing in India has not been his principle goal. Indeed in the last decade most of Mr Mittal's acquisitions have been overseas. Even in the UK, although he may reside in one of the finest mansions in London's Mayfair, and call the British Prime Minister his friend, Mr Mittal has done little for British Steel manufacturing or even the British Asian community. He pays few taxes in this country and uses his money to wield influence for his own gain. He was shocked at the negative media reaction when Prime Minister Tony Blair intervened on his behalf with the purchase of Sidex in Romania - in spite of having much to say about his donation to the Labour Party and still failing to understand the British repugnance for a "politicians for hire" scenario. Now, it seems he wants Indian political help.

Mr Mittal claims that the Arcelor bid "is not an individual issue connected to the Mittals but a larger issue". O really? Perhaps Mr Mittal can elaborate. I fail to understand how India would benefit from Mr Mittal owning a European steel maker. Would he make it a policy to hire Indian staff for example? Would he move production to sites in India? Or it just the tenuous offer of continued supply of steel for growth economies like China and India? The latter could just as readily be met by Arcelor's existing owners. And even if there is an impact between the two trading nations: France and India, who will be the real winner, India or Mr Mittal?

Mr Mittal has claimed that he "regretted racist comments about the bid (by Arcelor Chief Guy Dollé) and hoped that they were not really meant", which makes me wonder whether he understands the state of race relations in France. Where was he when pressure was being placed on French Politicians about the issue of wearing the hijab in Schools? Where was he when there were violent protests about the ghettoisation of France's Muslim community? Where was he when French newspapers re-published the Danish cartoons inciting violent protests and mayhem? Did he use his political influence for raise any of these issues? Racism has an ugly face and perhaps Mr Mittal could have woken up to it a little earlier.

And I'm not really sure that his case is one of racism. If as Mr Mittal claims "you have to look at the business as a business", then one can readily understand why Arcelor, the world's second largest steel producer and employer of 78,000 people (22,000 of them in France) has so readily spurned the bid. It does not take much business sense to figure out that cost savings - i.e. sackings, redundancies, closure of sites and sell-off of sideline businesses - are one of the key benefits of the merger. Dress it up any way that you like, Mr Mittal would not be interested in Arcelor if there were no "economies of scale" to be had. Given France's fervour in protecting its industries, one can understand why Mr Mittal is getting such short shrift. Mr Mittal might like to think that "individuals and emotions don't count" when it comes to business, but for steel workers it is likely to be all about individuals and emotions.

Mr Mittal's approach to Arcelor has been surprisingly gung-ho. Jacques Chirac said that Mittal Steel's "hostile bid had been made contrary to practice, with no prior explanation and no reason given on a large European Company". Mr Chirac also added that "it is the right of Europeans to care about the jobs and their future. We have absolutely nothing against a non-European bidding on a European company". Mr Mittal sourly replied that Netherlands-based Mittal steel was a European company!

I was also somewhat amazed by Mr Mittal plaintive bleating about how Arcelor chief Guy Dollé was hostile to the bid, to the point of hanging up on him on the phone. Inviting your opponent to a meal, listening to his rejection of our idea and then wondering why he won't return your calls is hardly surprising. And given that Lakshmi Mittal has dealt with a host of fierce opponents - from cold war regimes to gangs, surely he was prepared for the hostility?

Mittals' track record and tenacity may succeed in the end, but he hardly needs Indian help or our sympathy in his relentless task to corner the world's entire steel production. If intent on global domination, he could befriend that community that he hails from and any that he aspires to, making their problems his own and engaging in their politics.

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