Clashes 1
Much has been written about an alleged "Clash of Civilizations", originally articulated by Samuel P. Huntington in 1993. His thesis is straightforward: major conflicts are always defined by clashes between fundamentally different civilizations. Given events since the appearance of his book, and more especially since 9/11, commentators of every political stripe and persuasion have eagerly seized on Huntington's ideas and recast them as one black and white boundary of the battleground on which the war for hearts and minds is currently being fought worldwide.
What is unclear today – at least in Amerloque's humble view - is whether or not a "clash" is indeed in progress. It is also far from evident, pace the media, the politicos, and the commentators, exactly what form such a "clash", if any, has taken. Certainly a part of this conflict could involve a confrontation between Western values - of capitalism and democracy - and non-Western values. Defining such a clash is never easy, for what appears to be irreconcilable and lasting may just turn out to be an issue that can be resolved once all parties decide to negotiate in good faith. One might be far too willing to visualize a clash where, in fact, no conflict exists – for example, when an individual has made a smooth transition from one civilization to another. Perhaps, too, a kind of clash can occur when one side is simply unwilling to admit that times have changed.
Amerloque was reminded of this recently when Lakshmi Mittal, the "Indian" chief executive and primary owner of Mittal Steel, the world's largest steelmaking company, made a hostile takeover bid for the highflying flagship European steel company, Arcelor, a public company and Mittal's main rival. Arcelor was created in 2002 through the merger of the French, Spanish and Luxembourg national steel champions, all of which had benefited from billions in public funds over several decades for "restructuring" and "reorganization" and "rationalization". Mittal Steel is a Dutch company, and Arcelor is a Luxembourgian company.
The Mittal bid was immediately rejected by Arcelor's CEO, one Guy Dollé. Belgian and Luxembourgian politicians unhesitatingly jumped into the fray, followed immediately by the French Minister of Finance, Thierry Breton. All roundly condemned Mittal's bid, described as "badly prepared" by Breton, who also accused Mittal of not following "the grammar of business of the 21st century" and not "respecting the rules". France, it was clear, was against the merger and "pro-European".
Dollé, the Arcelor CEO, fatuously poured further oil on the flames, saying that Mittal Steel was a "company of Indians" and a "group of less-than-average" businesses. He railed on that European steel was like "perfume", while Mittal manufactured steel that was "eau de cologne". He then left no doubt how and where he stood: he stated that Mittal would pay for its bid in "monkey money" (monnaie de singe), a French expression equivalent to "Monopoly money", i.e., worthless scrip. The shameful double-entendre of "monkey" was lost on no one. Dollé the CEO laid it out: in his view, the sleazy, second-string Eastern company was attempting to take over the selfless, superior Western company.
Well, well. Amerloque couldn't help sadly laughing to himself at Dollé's desperate words, designed to foment an upsurge of economic patriotism in the "European" press and among various national authorities – and, in passing, save his own job. Just over a year ago, interviewed by Business Week magazine for an article concerning Mittal and the worldwide steel industry, Guy Dollé was quoted: "Mittal has had a vision for the industry that goes back a long way, well before the majority of his peers." Now, fourteen months later, outmaneuvered and outgunned by Mittal, Dollé is energetically marshalling his forces for what apparently is to be a long, somewhat bitter takeover battle.
Before looking at a hypothetical "clash of civilizations" (East meeting West), as symbolized by the Mittal/Arcelor encounter, several issues germane to the bid itself should be noted. First, both Mittal and Arcelor each hold about 5% of the worldwide steel market, Mittal a bit more than Arcelor, so a successful merger would produce a "world leader" … with only 11% or so of the world market, three times more than its nearest competitor. Second, the market fits are like hands and gloves: Arcelor is strong in strong in western Europe and Latin America, while Mittal is mainly concentrated in eastern Europe and North America. Third, the European Union will probably not oppose the takeover and merger, since by no stretch of the imagination can 11% of a market be considered a "monopoly position". Fourth, Arcelor itself is no stranger to hostile takeovers: just last month, Arcelor won a heated battle against a German rival, ThyssenKrupp AG, for a $5 billion steel producer in Canada. In a manner of speaking, Arcelor is now hoist on its own petard. Fifth, the takeover offer is composed of cash plus shares, usually a hard combination to beat. Sixth, Mittal and his family hold something like 88% of Mittal Steel, a substantial private holding which rules out any Arcelor counteroffer based on purchasing Mittal shares on the open market: there just aren't enough available to make a difference.
France has no concrete veto power over the merger: it is not a shareholder. Certainly French politicians are interested in the deal because Arcelor has 28,500 employees in France, and "economies of scale" (a codeword for "layoffs" in many people's minds) are to be feared if the merger succeeds … but real, "hard" veto power ? They have none. "Soft" veto power - the French use of which should not be underestimated – is another story. It looks like the success or failure of the bid, businesswise, depends on Arcelor shareholders only.
Is there actually more to the story ? Has a rapacious and unscrupulous Indian businessman, with a different culture, from a different civilization, fresh from dusty West Bengal (Mittal was born in Rajasthan, and raised in Calcutta), suddenly swept into town ? Playing by his own rules, does he plan to loot Europe of one of its industrial crown jewels, Arcelor ? Is there, in fact, a Clash of Civilizations insofar as capitalism is concerned ?
In this case, no, in Amerloque's view. Some Indians who immigrated to the UK in the 1960s and 1970s became shopkeepers. Others became manual workers. Conforming to rules laid down by their host country, some went into business; some became very successful. Of Indian origin, Lakshmi Mittal came to the UK, and, complying with Western values, adapted and succeeded in business. He has lived in Britain for some thirty years and is a British national. Mittal Steel is a Dutch company: its ADRs (American Depositary Receipts) are quoted on the New York Stock Exchange. Mittal Steel owns no plants in India. Individuals of many nationalities work at the Mittal firm: Poles, Frenchmen, Romanians, Kazakhs, Indonesians, Algerians, Americans … it is a global company with global reach, and global ambition. There is no "clash" - any native-born European could have done as he did.
* * * * *
(continued in Clashes 2)
What is unclear today – at least in Amerloque's humble view - is whether or not a "clash" is indeed in progress. It is also far from evident, pace the media, the politicos, and the commentators, exactly what form such a "clash", if any, has taken. Certainly a part of this conflict could involve a confrontation between Western values - of capitalism and democracy - and non-Western values. Defining such a clash is never easy, for what appears to be irreconcilable and lasting may just turn out to be an issue that can be resolved once all parties decide to negotiate in good faith. One might be far too willing to visualize a clash where, in fact, no conflict exists – for example, when an individual has made a smooth transition from one civilization to another. Perhaps, too, a kind of clash can occur when one side is simply unwilling to admit that times have changed.
Amerloque was reminded of this recently when Lakshmi Mittal, the "Indian" chief executive and primary owner of Mittal Steel, the world's largest steelmaking company, made a hostile takeover bid for the highflying flagship European steel company, Arcelor, a public company and Mittal's main rival. Arcelor was created in 2002 through the merger of the French, Spanish and Luxembourg national steel champions, all of which had benefited from billions in public funds over several decades for "restructuring" and "reorganization" and "rationalization". Mittal Steel is a Dutch company, and Arcelor is a Luxembourgian company.
The Mittal bid was immediately rejected by Arcelor's CEO, one Guy Dollé. Belgian and Luxembourgian politicians unhesitatingly jumped into the fray, followed immediately by the French Minister of Finance, Thierry Breton. All roundly condemned Mittal's bid, described as "badly prepared" by Breton, who also accused Mittal of not following "the grammar of business of the 21st century" and not "respecting the rules". France, it was clear, was against the merger and "pro-European".
Dollé, the Arcelor CEO, fatuously poured further oil on the flames, saying that Mittal Steel was a "company of Indians" and a "group of less-than-average" businesses. He railed on that European steel was like "perfume", while Mittal manufactured steel that was "eau de cologne". He then left no doubt how and where he stood: he stated that Mittal would pay for its bid in "monkey money" (monnaie de singe), a French expression equivalent to "Monopoly money", i.e., worthless scrip. The shameful double-entendre of "monkey" was lost on no one. Dollé the CEO laid it out: in his view, the sleazy, second-string Eastern company was attempting to take over the selfless, superior Western company.
Well, well. Amerloque couldn't help sadly laughing to himself at Dollé's desperate words, designed to foment an upsurge of economic patriotism in the "European" press and among various national authorities – and, in passing, save his own job. Just over a year ago, interviewed by Business Week magazine for an article concerning Mittal and the worldwide steel industry, Guy Dollé was quoted: "Mittal has had a vision for the industry that goes back a long way, well before the majority of his peers." Now, fourteen months later, outmaneuvered and outgunned by Mittal, Dollé is energetically marshalling his forces for what apparently is to be a long, somewhat bitter takeover battle.
Before looking at a hypothetical "clash of civilizations" (East meeting West), as symbolized by the Mittal/Arcelor encounter, several issues germane to the bid itself should be noted. First, both Mittal and Arcelor each hold about 5% of the worldwide steel market, Mittal a bit more than Arcelor, so a successful merger would produce a "world leader" … with only 11% or so of the world market, three times more than its nearest competitor. Second, the market fits are like hands and gloves: Arcelor is strong in strong in western Europe and Latin America, while Mittal is mainly concentrated in eastern Europe and North America. Third, the European Union will probably not oppose the takeover and merger, since by no stretch of the imagination can 11% of a market be considered a "monopoly position". Fourth, Arcelor itself is no stranger to hostile takeovers: just last month, Arcelor won a heated battle against a German rival, ThyssenKrupp AG, for a $5 billion steel producer in Canada. In a manner of speaking, Arcelor is now hoist on its own petard. Fifth, the takeover offer is composed of cash plus shares, usually a hard combination to beat. Sixth, Mittal and his family hold something like 88% of Mittal Steel, a substantial private holding which rules out any Arcelor counteroffer based on purchasing Mittal shares on the open market: there just aren't enough available to make a difference.
France has no concrete veto power over the merger: it is not a shareholder. Certainly French politicians are interested in the deal because Arcelor has 28,500 employees in France, and "economies of scale" (a codeword for "layoffs" in many people's minds) are to be feared if the merger succeeds … but real, "hard" veto power ? They have none. "Soft" veto power - the French use of which should not be underestimated – is another story. It looks like the success or failure of the bid, businesswise, depends on Arcelor shareholders only.
Is there actually more to the story ? Has a rapacious and unscrupulous Indian businessman, with a different culture, from a different civilization, fresh from dusty West Bengal (Mittal was born in Rajasthan, and raised in Calcutta), suddenly swept into town ? Playing by his own rules, does he plan to loot Europe of one of its industrial crown jewels, Arcelor ? Is there, in fact, a Clash of Civilizations insofar as capitalism is concerned ?
In this case, no, in Amerloque's view. Some Indians who immigrated to the UK in the 1960s and 1970s became shopkeepers. Others became manual workers. Conforming to rules laid down by their host country, some went into business; some became very successful. Of Indian origin, Lakshmi Mittal came to the UK, and, complying with Western values, adapted and succeeded in business. He has lived in Britain for some thirty years and is a British national. Mittal Steel is a Dutch company: its ADRs (American Depositary Receipts) are quoted on the New York Stock Exchange. Mittal Steel owns no plants in India. Individuals of many nationalities work at the Mittal firm: Poles, Frenchmen, Romanians, Kazakhs, Indonesians, Algerians, Americans … it is a global company with global reach, and global ambition. There is no "clash" - any native-born European could have done as he did.
* * * * *
(continued in Clashes 2)
© Text Copyright 2006 by L'Amerloque
posted by L'Amerloque at 1:11 AM
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