Premonitions of change

THE confines of the sober Iowa caucus are far from a final verdict, especially considering historical precedent, but the way Barack Obama’s ‘resurgence’ humbled Democratic frontrunner Hilary Clinton in the first test of the presidential campaign speaks volumes of how the American people want change. The Republican upset owes more to surprising winner Mike Huckabee’s Baptist leanings appealing to Iowa’s evangelical Christian base, but the public response for Obama’s charismatic message betrays premonitions of change in the American polity. Is it that the revolutionaries have finally started winning, that immaculate realpolitik experience may no longer be the most ideal credential to boast on the sole superpower’s presidential resume? Again, Iowa is far from a credible pointer. Quite the opposite actually, considering recent history. Regan, Bush senior and Bill Clinton also did poorly, and it is the last’s rebound that won him the “comeback kid” nickname that Hilary is looking to mirror in New Hampshire a few days from now. Only two things are strikingly different.
First, there is a qualitative as opposed to quantifiable tax and foreign policy issues difference between the two leading Democrats. Second, the contracted schedule leaves much lesser time between Iowa and New Hampshire this time around. And while the Republican equation is also far from settled, with Vietnam veteran proving critics wrong by staging a comeback of sorts of his own, it is clearly the Democratic nomination race that is generating by far the greater interest. And lest the furore carries sentiments too far, voter-debate will soon revert to what is at stake — the presidency of the United States, in ways the dirtiest ball game in international politics. And New Hampshire is no Iowa. As the debate progresses, Edward’s middle-class values will get lost in the intricacies of more pressing political requirements on the Democrats’ side, and Mitt Romney’s billions will quickly subdue born-again Christians trying to sustain Huckabee’s sudden dream run in the Republican race. However, as things are progressing, the Republican field is still wide open but the Clinton-Obama Democrat tie is likely to be closely fought, at least in the immediate future. Neither Democrats nor voters need reminding of the tremendous service the present team occupying the White House has done the Democratic nominee that’ll contest the presidency, so in all likelihood it will be a tie between the first black or first woman to be American president. And the way the 46-year-old political rookie has started in the race against the far better placed 60-year-old warhorse — getting “whiter than the North Pole” Iowa, including women and the youth to back him — there may be a few more first timers as this race for the White House seems set to generate unprecedented interest.


 

Shifting axis

THE world’s economic axis seems set for more change, tipping the balance further toward Asia and away from Europe and North America. Two years ago the Chinese bought out the failing British MG Rover car company and shipped the production lines to China. The latest evidence of major change is the confirmation that India’s Tata Industries is the favored bidder to buy the UK’s Jaguar and Land Rover businesses from Ford. Though not yet a done deal, the Indian conglomerate looks set to best its private equity rivals, not least because tighter bank credit means the investment funds face difficulties raising the $2 billion which is the likely asking price. If the sales go through, Tata will not merely have acquired two premier international motor brands but also a major high-technology boost. Its existing product, the Indica range, is facing growing challenges in the domestic market, not just from locals but from Japanese and American plants that have been established in India. Analysts expect that Tata will use its new assets and turn itself into a multirange international manufacturer with a strong offering in the Indian subcontinent. However, the company’s share price drop in Mumbai indicates that the deal has its dangers. For a start, Tata will be taking over the UK factories of Jaguar and Land Rover.
These are high-cost installations, especially in terms of labor and pension-fund obligations. Both companies are currently profitable. So this is not a distress sale by Ford; it is part of a worldwide reorganization of its businesses. Therefore, labor unions will suppose they are negotiating from a position of strength. Tata will in no way be able to dismantle the two production lines and take them off to India as the Chinese did with the effectively bankrupt Rover MG plants. Tata management seems set to gain not only new technology but some tough lessons in European labor relations with highly paid workforces. These, however, will be short-term challenges for the Indian industrial giant. The long-term gain for the company, for India and for Asia, will be substantial. Other Indian entrepreneurs have been building up their presence in Europe and America in key sectors such as food and IT. This may indeed be the year in which an Indian IT company seeks to buy one of the big — almost certainly American — software names. The US, however, though advocating free trade, practices covert protectionism, not least in resisting the operational takeover of its companies and making life difficult for successful acquirers. Foreign bank takeovers of US financial institutions have all come unstuck. Renault’s 1979 acquisition of AMC and Daimler’s take over of Chrysler both ended in commercial failure. Acquisitive Japanese companies were told in the 1990s that if they wished to enter the US market, it would have to be through building local production plants, not by acquiring a big US motor company. So they built — and very successfully too. Last October for the first time in the United States, Toyotas outsold Fords.


—Arab News