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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PMQs review: Theresa May shows how her confidence has grown

After her Brexit speech, the PM declared of Jeremy Corbyn: "I've got a plan - he doesn't have a clue". 

The woman derided as “Theresa Maybe” believes she has neutralised that charge. Following her Brexit speech, Theresa May cut a far more confident figure at today's PMQs. Jeremy Corbyn inevitably devoted all six of his questions to Europe but failed to land a definitive blow.

He began by denouncing May for “sidelining parliament” at the very moment the UK was supposedly reclaiming sovereignty (though he yesterday praised her for guaranteeing MPs would get a vote). “It’s not so much the Iron Lady as the irony lady,” he quipped. But May, who has sometimes faltered against Corbyn, had a ready retort. The Labour leader, she noted, had denounced the government for planning to leave the single market while simultaneously seeking “access” to it. Yet “access”, she went on, was precisely what Corbyn had demanded (seemingly having confused it with full membership). "I've got a plan - he doesn't have a clue,” she declared.

When Corbyn recalled May’s economic warnings during the referendum (“Does she now disagree with herself?”), the PM was able to reply: “I said if we voted to leave the EU the sky would not fall in and look at what has happened to our economic situation since we voted to leave the EU”.

Corbyn’s subsequent question on whether May would pay for single market access was less wounding than it might have been because she has consistently refused to rule out budget contributions (though yesterday emphasised that the days of “vast” payments were over).

When the Labour leader ended by rightly hailing the contribution immigrants made to public services (“The real pressure on public services comes from a government that slashed billions”), May took full opportunity of the chance to have the last word, launching a full-frontal attack on his leadership and a defence of hers. “There is indeed a difference - when I look at the issue of Brexit or any other issues like the NHS or social care, I consider the issue, I set out my plan and I stick to it. It's called leadership, he should try it some time.”

For May, life will soon get harder. Once Article 50 is triggered, it is the EU 27, not the UK, that will take back control (the withdrawal agreement must be approved by at least 72 per cent of member states). With MPs now guaranteed a vote on the final outcome, parliament will also reassert itself. But for now, May can reflect with satisfaction on her strengthened position.

George Eaton is political editor of the New Statesman.