Populist reaction to BP is dangerous

Allister Heath
THERE is much that is ugly about the BP fiasco. It goes without saying that the firm hasn’t covered itself in glory, that Tony Hayward, its CEO, has suffered from foot in mouth disease and that parts of the US coast are reeling from an en environmental catastrophe. I’ve criticised BP in the past and will continue to do so. But the reaction of many commentators, as well as of Barack Obama’s administration, has been even less edified and shows, yet again, that short-sighted populism is now the order of the day when it comes to the relationship between international business and politics.

Obama and his Democratic Party, for all their pretensions to globalism and love affair with international bureaucracies, are really narrow nationalists. They have relentlessly played the xenophobia card when dealing with BP, which they usually refer to as British Petroleum; that is so even though most of BP’s US operations are manned by Americans and are made up of former US firms purchased by BP. The authorities have scandalously downplayed the role in the crisis played by US firms. BP may be domiciled in the UK but it is a core component of America’s energy infrastructure: the fact that it was developing new sources of oil for US consumers (and hence reducing their reliance on the Middle East) ought to say it all. It even supplies the US armed forces with petrol.

Countries should believe in free markets and treat all firms equally, regardless of origin; yet this is clearly not happening in BP’s case. There comes a time when personal attacks, bullying and threats of part-nationalisation towards a UK firm and UK citizens should start to ring alarm bells – that time is now, especially given that the US authorities seem to be believe that they can decide BP’s dividend policy and in Obama’s case, talk of “kicking ass” and suggest Hayward be fired (this matters: BP’s payouts represent £1 out of every £7 made across UK listed companies and the firm is also one of Britain’s biggest taxpayers). The Foreign Office should acknowledge the spill has been a disaster – but it should also tell the Americans that they need to calm down.

There is now growing fears among British businesses that it will be harder for them to operate in the US in future; this could even become an issue for a firm such as BAE Systems, which relies on the American market. So much for the “special relationship”: Britain’s support for American foreign policy counts for nothing (Obama’s biography made his dislike of the UK very clear).

There is one caveat to this: we shouldn’t forget the anti-Kraft hysteria as the US food giant stalked and ultimately gobbled up Cadbury. Of course, Kraft made mistakes; but the ugly protectionism of many politicians and much of the media means that they are in a much weaker position to criticise the US today. That said, at no time did the anti-Kraft sentiment become as virulent and as extreme as the anti-BP rhetoric that now dominates America’s airwaves.

There is another issue. The public is right to want good safety measures and less pollution. But it is wrong to assume that this risk can be abolished entirely. Even the best-managed firm in the world will sometimes suffer from oil spills or other problems, especially when they have to explore in dangerous and inaccessible places. This is spill is clearly a disaster. But a little bit more rationality and a little less populism are desperately needed.