Resource security isn't achieved by locking up commodities

We must strike at the root of resource insecurity, by demateralising our economy where we can.

Last week, Chatham House added to the drumbeat of concern about resources, declaring that "the spectre of resource insecurity has come back with a vengeance." In its dense, persuasive report, Resource futures (pdf), Chatham House's researchers diagnose the problems posed by increasing resource insecurity in detail, systematically identifying the causes of insecurity. This is an expansive analysis, and a major achievement, but the recommendations made in the report have the air of the outcomes of international climate talks: frameworks and processes to find solutions rather than actual solutions.

In researching the existing literature on material security as part of our work for the Circular Economy Task Force, we at Green Alliance have found that much of the debate about resource security has focused on two factors: raw material price volatility and the risk that international trade of raw materials will be restricted by nation states.

This reductionist framing of material security risk has artificially narrowed thinking about the underlying risks which foster price volatility and restricted access to materials. This, in turn, has limited the options we use to mitigate these risks.

Focusing on political risk has led to responses like land banking, in which countries and companies directly purchase foreign land to serve their resource needs; and raw material agreements, where countries sign contracts to trade raw material supplies for technology or infrastructure development. China, Japan, and Germany have all pursued these strategies in the last two years, for a wide variety of commodities ranging from food to metals.

Resource futures notes these developments and rightly shows how these and similar policies, including production subsidies, the actions of state owned enterprises, and market manipulation, have "fuelled the fire" of resource insecurity. It is clear that these strategies also have social drawbacks, but they are more fundamentally flawed because they deal with the symptoms of insecure resources, not the causes.

Getting to the bottom of price volatility and restrictions on raw material trade means understanding more about why we can't simply meet growing demand for resources the way we did in the 20th century: by expanding extraction. Absolute scarcity is rarely a hard limit. But across a whole host of materials, the rising environmental costs of production are a big part of the reason for volatile prices and restrictions on access to materials. Resource futures dissects these causes in discussion about "environmental faultlines", the "interconnected nature of the resource production system," and the risks embedded in the push to extract resources from "extreme environments" like the Arctic.

Chatham House has done a major service in moving debate on material security from symptoms to causes. But the juggernaut runs into the sand when it comes to recommendations, which stress that "collaborative governance is the only option" and prescribe rule-based resource governance, informal stakeholder dialogues, and multilateralism.

The report itself admits that "success to date [of political responses] has been patchy" for timber, "unsuccessful" for agricultural export restrictions, and "largely unsuccessful" in tackling price volatility for resources from oil to tin. It should come as no surprise that countries have therefore relied on unilateral measures which are politically insecure. The reasons for this, put simply, are that foreign land ownership or exclusive supply contracts merely cut the global resource cake into different slices, with larger proportions going to countries willing to pay, contract, or fight for a larger share of resources than they control within their borders. This enforced inequality isn't a durable solution. Ownership, contracts, and commitment to free markets fall by the wayside when resource prices spike, as examples like the restriction on Argentinian beef exports in 2006 – hardly a scarce commodity – show.

Multilateral governance is better, but it's not clear that it isn't just an attempt more fairly cut up the same cake. And this is the problem: Chatham House's analysis that the "fundamental conditions that gave rise to tight markets in the last ten years remain" means that their recommendations pit diplomacy against raw resource nationalism. As their own evidence shows, diplomacy hasn't succeeded in this struggle so far. It"s not clear why diplomacy will now succeed in "mitigat[ing] excessive politicization of resource markets and trade" in "markets [that] have always been political."

The truth is that multilateralism isn't enough. We must strike at the root of resource insecurity, by demateralising our economy where we can, but also by finding sources of raw materials which avoid the environmental risks underlying material insecurity. The circular economy represents one way of doing this. It's still more of a good idea than a plan of action, but without it we're stuck merely managing resource insecurity, rather than solving it.

A smelter shovels raw iron on a blast furnace in Germany. Photograph: Getty Images

Dustin Benton is a senior policy adviser at Green Alliance, leading the Resource Stewardship theme.

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Brexit is teaching the UK that it needs immigrants

Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past.

Why did the UK vote to leave the EU? For conservatives, Brexit was about regaining parliamentary sovereignty. For socialists it was about escaping the single market. For still more it was a chance to punish David Cameron and George Osborne. But supreme among the causes was the desire to reduce immigration.

For years, as the government repeatedly missed its target to limit net migration to "tens of thousands", the EU provided a convenient scapegoat. The free movement of people allegedly made this ambition unachievable (even as non-European migration oustripped that from the continent). When Cameron, the author of the target, was later forced to argue that the price of leaving the EU was nevertheless too great, voters were unsurprisingly unconvinced.

But though the Leave campaign vowed to gain "control" of immigration, it was careful never to set a formal target. As many of its senior figures knew, reducing net migration to "tens of thousands" a year would come at an economic price (immigrants make a net fiscal contribution of £7bn a year). An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent. For the UK, with its poor productivity and sub-par infrastructure, immigration has long been an economic boon. 

When Theresa May became Prime Minister, some cabinet members hoped that she would abolish the net migration target in a "Nixon goes to China" moment. But rather than retreating, the former Home Secretary doubled down. She regards the target as essential on both political and policy grounds (and has rejected pleas to exempt foreign students). But though the same goal endures, Brexit is forcing ministers to reveal a rarely spoken truth: Britain needs immigrants.

Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. On last night's Question Time, Brexit secretary David Davis conceded that immigration woud not invariably fall following Brexit. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (while sounding rather unconvinced), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

The UK’s vote to leave the EU – and May’s decision to pursue a "hard Brexit" – has deprived the government of a convenient alibi for high immigration. Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past. Brexit may have been caused by the supposed costs of immigration but it is becoming an education in its benefits.

George Eaton is political editor of the New Statesman.