Why the Glencore-Xstrata merger is alarming governments

Too big to succeed?

First it was Qatar, then South Africa followed by the EU and now China. The largest merger deal commodities history is alarming governments all over the world.

The $76 bn Glencore-Xstrata merger was first announced in February 2012. It was to be the largest corporate deal that year, but was successively held up: First there was Qatar Holdings, a shareholder of both commodities giants, who demanded a higher share price and a cap on the vast payments made to board members. To break the deadlock between Qatar and other investors, Tony Blair was roped in at the last minute to negotiate and a deal was made in November 2012.

The merger of the two Anglo-Swiss companies then had to jump through the hoops at Brussels. To meet the EU’s competition laws, Glencore, the world’s largest commodities company, had to sell its stake in the zinc trader, Nyrstar. Approval was granted in late November 2012.

South Africa was next on the list of countries to console. The state’s Competition Tribunal wanted to limit job losses that the merger would inevitably entail in the resource rich nation. Other concerns regarding coal supplies (85 per cent of South Africa’s electricity is from coal fired plants) were smoothed over and the deal was again approved in January 2013.

Deadlines were set and investors raring to go, but one last government had to be satisfied – China. Glencore and Xstrata – when merged – will control over 10 percent of the world’s copper concentrate supplies. China is the world’s largest copper consumer and this has caused the deal’s current delay – China is obviously concerned about an over-reliance on a Swiss company listed in London.  

One of the larger deals in corporate history now hangs in the balance of Mofcom (the Chinese Ministry of Commerce). Whether they will request – like the EU – that certain assets be dropped to reduce the company’s size and dominance, or flounder under pressure of the two commodity giants and approve the deal outright will set the rules for future mega-deals.

The multinational vs. nation state debate has long been a topic pursued by international relations theorists. But here reality trumps theory: A merged Glencore-Xstrata will be the world’s fourth largest diversified mining company and by far the largest commodities trader. As we have seen, the merged company will hold sway over the resources of the EU, South Africa and China, let alone numerous smaller countries. This deal, then, is critical to both the future of commodities trading and multinationals as a whole. Come May 2nd, the latest date for the merger, we could see either a stagnant deal held at ransom by the Chinese government, or a new power to be reckoned with over the world’s resources.       

Glencore. Photograph: Getty Images

Oliver Williams is an analyst at WealthInsight and writes for VRL Financial News

Photo: Getty
Show Hide image

The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.