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Sunday, May 01, 2005

Of cars and arms

What's the connection between the British General Election, the closure of a car plant in the Midlands and East Asian geopolitics? Well, the answer's not that hard really... arms sales to China.

This month's issue of Socialist Review has a quality analysis of the collapse of Rover cars - with the loss of at least 5000 jobs - by the excellent Walrus. It seems that the strategic considerations of the Bush administration played an important role in bringing an end to over a hundred years of carmaking at Longbridge when the Chinese government got upset at Britain's US-inspired stance against lifting the EU arms embargo.

Last and by no means least is the geopolitical background to the whole Rover debacle. According to former Labour members of the European Parliament, Ken Coates and Henry McCubbin, New Labour's 'blind allegiance to Washington' is one of the prime reasons for the collapse of the Rover deal. Why? Because, on the say-so of George W Bush, the British government is preventing the European Union from lifting its embargo on arms sales to China. Condoleezza Rice has made it clear to all and sundry that the US regards the Pacific as its backyard and the EU should keep its nose out. As a result, the Chinese are none too happy with this interference. And Labour's moves at EU level appear to have more or less coincided with the Chinese authorities writing to the British government to say that a deal on Rover was now unlikely.

According to the two Labour stalwarts Coates and McCubbin, Blair's role in all of this has enraged the Chinese government, and in a letter to the Financial Times they explained that 'it is no coincidence that by 22 March, the UK Department of Trade and Industry had received the letter from SAIC calling the whole deal into question'. All the rest, they say, 'is an attempt at cover-up and distortion, to hide where the true problem lies'. And where would that be? 'It lies with the relationship between the venal leadership of the Labour Party and the right wing administration in Washington. This disaster is entirely of the making of Mr Blair and Mr Straw and the workers are what they would otherwise call collateral damage.'

This is something I've posted on before- but it appears that previous commentary to the effect that the UK was prepared to go against Washington on this one was wrong. Or just possibly this reflects one major point of difference between Tony Blair and chancellor Gordon Brown (among many I'm sure). Of course Blair was always going to go with his Texan buddy, whatever the cost to the UK economy. The complexity and interconnectedness of the political and economic in the capitalist system are certainly mind-boggling at times. But I'm sure this thought is not the one that's keeping the ex-Rover workers awake at night.


At May 02, 2005 11:56 AM, Anonymous skip said...

Kotaji - Two points. First, are you seriously agreeing that MG Rover was a viable business enterprise - one that Shanghai Auto was really seriously interested in buying whole? Come on, you're brighter than that. MG Rover alrady sold the intellectual property for Rover's new models anyway, the only thing left is MG intellectual property, and that's all the Chinese wanted as its really the only thing of value left in the company (take a look at the Ssangyang deal with the same group in SK to see how this strategy worked there). The real stumbling block was pensions. Unlike in South Korea where the government removed pension obligations from the sale and accepted the burden themselves, this isn't possible in the UK (it violates EU rules for one). After all it's not as if they intend to keep the plant open in the medium term - and without agreement on the pensions, the plant closure and layoffs would have cost Shanghai auto a tremendous amount of money. You live in Britain, I wouldn't think I'd have to explain the obvious when its comes to British car manufacturing the utlity of keeping thousands of (globally speaking) over paid workers on the payroll. Think about it, a British worker costs more than 50 times more than a Chinese worker - not including pensions and other costs.

The second point concerns the embargo. The socialists seem to be arguing that the UK should have, and here's the crux, defied Bush and supported Chirac's call to sell the Chinese more and better weapon systems, regardless the fact the Chinese government continues to show a disregard for the territorial boundries of its neighbors and has made explicit threats to kill millions in Taiwan with said weapons...and yet the socialists believe arming China is a good thing!? Of course again it's not like the UK or the EU will have to come to the aid of Taiwan or get involved if war were to erupt using the weapons they are so eager to sell China. And let's not forgot who's behind the embargo lifting initiative...the same country that performed atomospheric nuclear tests over a Polynesian colon years after the rest of the world decided it was to dangerous. Atomospheric and then years of underground nuclear tests that have irradiated France's colonial territory. It was Chirac who actaully started the tetsts agina in the mid-90's. I mean it's not like French people liove there so what's the problem, right? And now the Socialists find cause to support this same government in its quest to increase weapons sales to China.

I guess socialists are only concerned with maintaining the comfort and standard of living of thier national co-patriots. East asians be damned.

At May 03, 2005 12:10 AM, Blogger kotaji said...

Thanks for your comments, but let's get a few things straight here. I think you may have misinterpreted my post a little bit (perhaps I was a little bit opaque myself).

First, even as someone who is no expert on the car industry and economics in general I can see that there were a number of problems with the potential SAIC deal. However, I think that the idea that geopolitics played a role in the collapse of this deal (among other factors) is highly plausible. Let's not forget, for a start, that SAIC (as the Walrus points out) is a state-owned company and this whole attempted deal had the character of a state-to-state negotiation rather than some free-market affair in which purely economic factors were being taken into consideration. Clearly though, as you say, even if the deal hadn't been scuppered by 'outside' factors, the future of Rover under Chinese ownership wouldn't have been a long one. Which is why, to be honest, I'd personally have advocated some sort of nationalisation and a long-term conversion of the plant to a different type of production.

On the second point, I think you need to read the original article a bit more carefully, because neither it nor I are advocating lifting the arms embargo on China. The point of my post really was to point out how this particular example reveals a broader fact about the way the capitalist system works. That is the interconnection of the political and the economic on a global scale. A phenomenon that can leave governments caught in a matrix of conflicting loyalties (in this case they include: US power, the EU, the UK arms industry, the British manufacturing economy and the British electorate at a very sensitive moment).

Personally, as I've at least implied before in this blog, I think the hypocrisy of the EU and particularly France, is quite astounding on this issue. Let's not forget also that the UK arms industry is absolutely desparate for the embargo to be lifted (this is one of our last really profitable bits of manufacturing) and it was looking until recently as though Blair and Brown would defy Bush on this one for the sake of that industry.

Of course I'm against selling arms to China. But clearly, as you might have guessed, it's not for the same reasons that the US is against it. I have no preference for US hegemony, Chinese hegemony or European hegemony - imperialism looks as bad to me whoever has got their finger over the button.


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