Blair's tycoon lobbied US against British interests Labour's steel king backs US
Antony Barnett, Kamal Ahmed and Oliver Morgan Sunday February 17, 2002 The Observer The Indian steel tycoon and Labour Party donor, Lakshmi Mittal, has spent hundreds of thousands of pounds in America lobbying against British interests and jobs in direct opposition to official Government policy. The disclosure blows a hole in the Prime Minister's claim that his letter supporting Mittal's business interests in Eastern Europe would be good for the UK and has provoked fury in the British steel industry. The Observer has learnt that Mittal - who has fewer than 100 British employees - has paid $600,000 (�420,000) to a campaign group, Stand Up for Steel, that is pushing President George Bush to slap tariffs of 40 per cent on all steel imports to the US. Mittal's Chicago-based company, Ispat Inland, which is America's sixth largest steel producer, has also made nearly $100,000 in political contributions to both the Republican and Democratic parties to push its case in Washington, as well as spending tens of thousands of dollars more hiring powerful US lobbyists. Last month Ispat Inland's US boss, Peter Southwick, along with other steel company leaders, wrote to Bush urging him to impose import tariffs of at least 40 per cent to prop up the US market. If, as expected, Bush introduces the tariff early next month the British steel industry could see its �250m export market to the US dry up with the potential loss of thousands of jobs. Corus, the former British Steel, wrote to the Prime Minister last autumn warning of the dangers of the US tariff issue. The letter arrived at Number 10 just a few months after Blair had written to the Romanian Prime Minister, Adrian Nastase, praising a deal by Mittal's LNM company to buy Sidex, the country's previously state-owned steel industry. In the letter, which led to a storm of protest last week, Blair said that LNM was a 'British business' despite being registered in the Dutch Antilles and Rotterdam. Critics claimed that Mittal was getting preferential treatment from the Government because of a �125,000 donation he made to the Labour Party before the last general election. Downing Street has dismissed the claims, saying this weekend that the Prime Minister would act in exactly the same way if he were asked to support LNM over a similar issue and that he had 'no regrets' about writing the letter. Mittal's efforts in the US are in direct opposition to British Government policy. The Department of Trade and Industry has lobbied hard in Washington to prevent Bush from imposing these tariffs. Senior officials have also said that any tariffs may be illegal under the terms of the World Trade Organisation agreement on tariffs and trade. The European Union is also opposed to the tariffs and has demanded that America withdraw the threat of an all-out 'steel war'. Last month Patricia Hewitt, the Secretary of State for Trade and Industry, told the newly formed all-party steel group of MPs that she was resisting the new Bush policy. Last week junior Trade Minister Melanie Johnson made the same arguments in the Commons during ministerial questions. Johnson said: 'The Government and Ministers are making every effort to work with Corus to ensure that the major problem facing the industry - the threatened events in the USA - is dealt with and tackled in an effective manner. 'We believe that the issue that needs to be addressed is that, unlike the industry in the UK and the EU, the US industry is trying to export problems to the rest of the world. The US needs to grasp that nettle. Imports are not the cause of the problem.' The letter from Corus chief executive Tony Pedder said: 'In the event that talks [between the US and the EU to resolve the issue] fail, the consequent shielding of the US steel industry will be at the expense of the industry in other countries.' Steel unions in the UK are also furious. A spokesman for the Iron and Steel Trades Federation union said: 'This is outrageous. Thousands of British jobs would be at risk if these tariffs came in. Mr Mittal appears to be saying different things to different people in different parts of the world. We are astonished that research was not done prior to Blair's decision to support Mr Mittal.' Bush is to decide by 6 March whether to trigger measures in the 1974 Trade Act which would allow tariffs to protect US steel companies which have seen their output undercut by cheaper steel. While former President Bill Clinton did not support the imposition of tariffs, the campaign lobbying Bush by Ispat Inland and others has been hugely successful. Protective tariffs would jeopardise the 500,000 tonnes of steel Britain exports to the US each year, but the impact would be multiplied because, without access to the US, cheaper Asian steel would flood Europe. A spokesman from Ispat said: 'Ispat Inland is one of 50 steel companies in the US backing campaign for import tariffs. Mr Mittal has companies across the globe and it is perfectly reasonable that each one will lobby for its own interests.' Downing Street also denied that Mittal's American operation would embarrass the Prime Minister. 'We've set out on many occasions why this letter was sent,' Blair's official spokesman said. 'It was on the advice of the ambassador in Romania, and that advice was acted upon.'
