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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What progressives can learn from Europe

The centre-left must articulate its own vision of a cohesive society, backed by an understanding of sovereignty that accepts the nation-state is the central pillar of security and belonging.

The debate about the Labour party’s future has seldom been more parochial or inward-looking. Those who pass comment on Labour’s fate from the right and left of the party do so with an almost entirely British lens. In this insular universe, it is as if the world beyond the UK’s shores never existed. ‘Socialism in one country’ is back with a vengeance. Yet to recover politically and electorally, British Labour must learn from social democrats and progressive forces across Europe. There are three critical lessons from other countries that the centre-left ought to heed.  

The first is that centre-left parties have to resist being squeezed between neo-liberalism and the new social movements. Yes, social democrats should rebuild their economic credibility and espouse a responsible governing agenda. But that should not mean rejecting all ties to social and environmental activism. The networked civil society is where most political energy and vitality currently resides in western democracies. The lesson of Podemos in Spain and Greece’s Syriza is that people want to be agents of change themselves, whether saving local high streets from unscrupulous developers or working to build their own affordable housing. Casting a ballot every four or five years no longer constitutes meaningful political engagement. Across Europe, social democrats have to form new alliances in pursuit of a better society reaching beyond traditional party structures. 

A further object lesson is that opposition to austerity on its own is not enough to win power. Of course, premature cuts have weakened growth, jobs and living standards. In southern Europe, the masochistic pursuit of austerity threatens to unleash a social catastrophe. However, centre-left parties must show they would be competent managers of the economy articulating a coherent plan to deal with debt: not just net public sector debt over the economic cycle, but tackling unsustainable financial sector and household debt. Social democrats have to show how they would govern in a world where there is less money around for state spending after the great recession and the impending threat of secular stagnation. This demands a strategy for regulating financial markets that promotes the public good, tackles systemic risks and reforms banks that are ‘too big to fail’. An industrial modernisation plan would rebalance our economies away from their reliance on financial services towards knowledge-intensive sectors and manufacturing. In reforming the tax system, there ought to be a major clamp-down on cross-border tax evasion and fraud while restoring the progressivity of tax using redistribution to tackle new inequalities.

Finally, the left must not be distracted from confronting deeper underlying forces in politics. Centre-left parties are losing elections because voters don’t trust politicians to protect their way of life against the impersonal forces of global change. Europe has pitched dramatically to the right - not only towards Christian Democratic and Conservative parties, but new forces adept at exploiting voters’ fears about economic insecurity, immigration and hostility to the EU. In the UK, UKIP has now become the dominant challenger to Labour in northern England and the Midlands; last year, the Danish People’s party surged to power. In the heartlands of European social democracy, from the Nordic states to France and the Netherlands, right-wing populists are on the rise. In Austria this week, a hard right presidential candidate was in touching-distance of power.

The failure to counter the right isn’t just about poorly executed electoral strategies, weak leadership, or the price of incumbency in coalition governments: something more profound is going on. Regardless of national context, social democracy’s support base is being eaten away. The left is losing, not just on the conventional politics of economic competence, but increasingly on the vexed politics of national identity.

That said, the temptation to raise the drawbridge against immigration ought to be resisted. Flirting with a restrictive immigration policy is superficially tempting when the populist right is winning, but imposing arbitrary limits would be economically damaging as well as politically unprincipled. Instead, low wage and vulnerable workers across the EU ought to be better protected. Permitting the uncontrolled exploitation of low-cost labour in Eastern Europe has undermined the entire European project. More safeguards against agency working and zero-hours contracts are needed.             

Rather than pretending that government on its own can do everything to shield citizens and communities from global market forces, the priority should also be to encourage intermediate institutions located between the central state and the free market that rebuild a sense of local attachment, recreate respect for traditional jobs and civic identities, and encourage a spirit of mutual obligation embodied in organisations like mutual’s and co-op’s. The left must end its ambivalence about English identity in the aftermath of devolution to Scotland, Wales and Northern Ireland. Labour must not be afraid ‘to speak for England’.

The centre-left must articulate its own vision of a cohesive society, backed by an understanding of sovereignty that accepts the nation-state is the central pillar of security and belonging. To navigate the hard road back to power, social democratic parties will have to acknowledge the communal attachments that give meaning to our lives in an era of unprecedented insecurity and upheaval. Only by securing the trust and allegiance of citizens within the nation-state can the centre-left win the argument for international engagement and co-operation: the cornerstone of a liberal world order. 

Patrick Diamond is Co-Chair of Policy Network. The Progressive Governance Conference takes place in Stockholm 26-7 May 2016