Monday, November 8, 2010

Europe grabs energy sources from poor

Only the brightest and the best will represent the EU as top diplomats, Catherine Ashton has promised. On paper, the Union’s foreign policy chief should have no difficulty honouring this pledge: you can be sure that the recruits to her external action service did a lot more at college than keep a bar-stool warm.

With few exceptions, though, the same recruits leave their intellectual curiosity in the car park each morning. For being a diplomat requires that one swallows assumptions that are demonstrably false and then regurgitate them ad infinitum.

Trade issues inevitably absorb a great deal of any envoy’s time. To an outsider unschooled in jargon, they can seem bewildering, yet for an EU diplomat there is really just one rule to follow: denounce protectionism at all times.

According to the European Commission’s propaganda, it is an unpardonable offence for any country to try and avoid losing jobs to somewhere with lower wages or to shield a home-grown industry from cheaper imports. Yet anyone with even a flimsy grip of history can tell you that protectionism is vital under many circumstances. The United States became the world’s fastest-growing economy in the late nineteeth and early twentieth century, at a time when it slapped some of the world’s highest taxes on imported goods.

Later this week, Karel de Gucht, the EU’s trade commissioner, will in effect tell China that it is not allowed to use the kind of policies that have helped other economies to flourish in the past. A strategy paper outlining his key priorities for his term in office proposes that retaliatory measures should be taken against countries that forbid EU firms from bidding for government contracts.

De Gucht’s aides are taking aim at a 2002 law requiring that Chinese authorities buy goods or services from Chinese companies. This restriction has clearly paid dividends. Since it was placed on the statute books, China’s public procurement market has tripled. State purchases are now worth at least $88 billion, according to the magazine China Business Review.

Contrary to what Brussels officials claim, Western firms do not have some God-given entitlement to operate wherever they wish. It is clever of the Commission to infer that it merely seeks a “level playing field”. The reality of global capitalism is that poorer countries are at an unfair disadvantage and would be foolish not to favour domestic suppliers.

Indeed, the Commission itself recognised in a separate paper published in October that the “underlying motivation” behind such favouritism was to safeguard jobs. And yet it described a “buy local” law introduced in Brazil as a “worrying development”. Lest we forget, Brazil remains an impoverished country by European standards. The United Nations estimates that gross national income in Brazil per head of population is about $10,000 per year – well under half that of the Czech Republic and one-third that of France.

De Gucht’s strategy document suggests he has tested positive for the same kind of neo-imperial hubris that afflicted his predecessor Peter Mandelson. It resolves to get tough on countries audacious enough to think that their natural resources should be used for purposes other than padding the wallets of European entrepeneurs.

Plans by de Gucht to lean heavily on countries that restrict exports go even further than statements made by Mandelson shortly before he unexpectedly returned to London in 2008. Whereas Mandelson simply undertook to tell off governments that don’t hand over their minerals to foreigners, de Gucht is now committed to achieving international rules that deny poor countries the possibility of lifting themselves out of poverty. “The sustainable and unrestricted supply of raw materials and energy is of strategic importance for the competitiveness of the European economy,” his new paper says.

Never mind, then, that countries need to levy taxes on exports to raise sorely-needed revenue – as Argentina did when it was beset by an economic crisis in 2002. Never mind that Botswana’s diamond industry has illustrated the benefits of banning exports of unprocessed gems, in order to stimulate their processing and provide vital jobs at home. Never mind that there can be good environmental grounds on which to regulate trade – as Mozambique’s parliament decided in May, when it reacted to deforestation by imposing a tax on exports of unprocessed wood. If de Gucht has his way, all such measures would be declared inadmissible by the guarantors of market liberalisation.

De Gucht must have his head in the clouds if he really believes all that blather about how the European economy should have an “unrestricted supply” of raw materials. Although the EU does not measure its resource use or have any targets for reducing it, a 2009 study by the Sustainable Energy Research Institute in Vienna calculated that at 43 kilos each day an average European consumes three times as much of the earth’s resources as an Asian and four times as much as an African. Thinking we are less gluttonous than Americans won’t get us very far: while it’s true that we use up less resources than our cousins in the US, Europe relies more on imports than any other continent.

By genuflecting to a narrow concept like competitiveness, de Gucht is locking the Union into a voracious cycle of exploitation. Rather than acting responsibly – by insisting on a more efficient use of resources and greater recycling – he is refusing to accept that there are bounds to the planet’s riches. When will this madness end?

·First published by New Europe (, 7-13 November 2010

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