One day, India will be the richest economy in the world - probably. Russia, too, with its vast natural gas resource, is likely to become an ever more important economic superpower, while Europe will no doubt be forced to live off old glories, and will attempt to compete by staying as high up the value chain as it possibly can.
The three way tussle between Mittal, Severstal, and Arcelor over the fate of the European steel company which claims to put quality before quantity, is perhaps the first indication of the palpitations that will follow over the course of this century.
In India they are celebrating. Sitaram Agarwal, president of the Federation of Rajasthan Trade Industry, the area where the young Lakshmi first earned his stripes, said: “‘We are all proud of him (Mittal). Rajasthan has now become a global name, thanks to this man.” Meanwhile, his younger sister said: ‘He does not give up easily. That is his strength.” While her husband added: “‘This is a day when every Indian shall feel proud.”
But in Russia the response was cold. Boris Gryzlov, the speaker of the Duma, Russia’s lower house of parliament, said: “I consider the events taking place around this deal as an example of Russian business facing serious obstacles when trying to expand into global markets. The unprecedented propaganda campaign that has been launched around the merger of Russian company Severstal with Europe’s Arcelor shows that people don’t want to let us into global markets.”
Elsewhere, it’s been reported that Severstal, which is likely to ultimately enforce a $140m penalty clause on Arcelor for pulling out, is planning to up its bid. It’s even been reported that other Russian oligarchs might come to the aid of the billionaire owner of Severstal, Alexey Mordashov. Even Roman Abramovich, the one man who can pose a serious threat to Lakshmi Mittal’s crown as the richest man resident in the UK is said to be considering allying himself with Mordashov.
As for Arcelor, despite reports yesterday that Arcelor chief executive Guy Dollé was to also hold that position with Arcelor Mittal, it appears he is on his way out. So robust was his defence against Mittal, that is seems hard to believe he will hold a senior position in the new company. Instead, the management must unpick the mess created by Arcelor’s determination to avoid the merger with Mittal, including what to do with the Canadian subsidiary Dofasco, which Mittal wants to sell, but which Arcelor has apparently ring fenced from a sale.
So far, the story is one of Europe doing everything possible to fight off an Indian takeover, only to relent when it becomes clear that blocking India involves siding with Russia. Is this a pattern that will repeat itself over the next few decades?
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