Thursday 20 December 2007

Racism in the Era of Globalization (UPIASIA)

M.D. Nalapat

Manipal, India — Throughout the European Union, and increasingly in the United States and Australia, immigration is being directed on racial grounds, with preference given to immigrants of European origin. This is despite the reality that an immigrant from Chennai or Hyderabad in India is far more likely to add immediate economic value to a society than migrants from Tirana, Bucharest or Sofia, to take just three examples.

Even Britain, till now a haven of race-neutral policies, has lately introduced measures directed against citizens of countries other than those with European-origin majorities. Clearly, to many Western policymakers, "globalization" is a one-way street, confined to improving Western access to other locations but hostile to a reverse flow. The blocking of a Dubai-based company from acquiring a port in the United States -- even though that city is largely run by executives from Western countries -- is just one of numerous examples of the phobic reaction to efforts by outside corporations to buy into Western companies.

Astonishingly, even the corporate sector has not freed itself of biases dragged over from an age in which European countries administered most of the world. Today, both India and China are witnessing growth rates that could in a generation recreate the period when India and China accounted for over half the world's output, an age that vanished only in the early 1880s. Especially since the 17th century, what has driven Western prosperity is the unprecedented expansion of knowledge within those societies, which even today account for nine out of ten scientific patents worldwide (a small but increasing proportion of which are being contributed by researchers of Asian origin).

It is only in the past two decades that Brazil, India and China have been closing the "knowledge gap," although the three are as yet far behind Western countries in the range and significance of their discoveries. Should they reach Western levels of performance, the global economy would be the beneficiary of the numerous improvements and additions that such research would create, in the same way as populations worldwide are sharing in the benefits of Western prowess in science and technology.

Two years ago, the reaction of the board of European steelmaker Arcelor to a takeover bid by India-born entrepreneur Lakshmi Mittal gave the first hint that race could be a factor in corporate planning . Key company officials, ignoring Mittal's record in turning around dying companies -- and becoming one of the richest individuals in the world -- talked of Indian "eau de cologne" versus European "perfume," and even of the undesirability of "monkey money" (Mittal's). Finally shareholder pressure forced them to agree to a takeover that has since boosted the now merged Arcelor-Mittal stock substantially.

The same happy trend followed the subsequent, and entirely civilized, ITata Steel's takeover of British steelmaker Corus. Unlike Arcelor, the British firm's directors welcomed the entry of the Indian company. Indeed, Britain has been significantly relaxed in its reaction to Indian takeovers, unlike the rest of the European Union and, surprisingly, the United States. Recently whiskey producer Whyte & Mackay was taken over by India's UB in a friendly atmosphere, and events since have confirmed that the Indian company's global distribution network has been a significant plus to the British company.

The subliminal racism that lurks behind the polished mahogany walls of the boardrooms of some U.S.-EU corporations came into the open a fortnight ago, when the testy response of Orient-Express CEO Paul White to Indian Hotels Vice-Chairperson Krishna Kumar became public. In his missive, White explicitly stated that an Indian connection would significantly degrade the value of the U.S. company's brands.

As the continuing viability of U.S. Senator Barack Obama as a U.S. presidential candidate is demonstrating, such a conclusion does scant justice to the tolerant and inclusive mindset that is the most attractive feature of present-day Western society. Indeed, several Orient-Express customers come from the Middle East and South and East Asia, while a significant proportion of those of European origin have business and social links with individuals and institutions in locations other than North America, Europe and Australia. White is at least a generation off base in his implicit assumption that customers in Western countries would be turned off by a non-Western owner despite retaining the quality of service.

A similar shriek of alarm has greeted news that Britain's faltering Jaguar and Land Rover brands are at risk of a takeover from either Tatas or the also India-based Mahindra group. While the British public and those associated with the two brands in Britain have been welcoming, the reaction of Ken Gorin, the U.S.-based chairman of the Jaguar Business Operations Council, was that he did not believe "the U.S. public was ready for ownership out of India of a luxury car."

That a U.S.-based company is competing with major Indian companies for control of the two brands may of course be coincidental. Sadly, even the media has not been entirely without bias on this issue, with several commentaries in the United States expressing skepticism over the placement of non-Western executives in top management slots. For example, dismissive views have been expressed on Citigroup's recent decision to appoint India-born Vikram Pandit as CEO, despite the performance of other India-born CEOs as Indira Nooyi of Pepsi and Rajat Gupta of McKinsey.

One-way streets are rare, and the involvement of non-Western corporate leaders in Western companies is an inescapable adjunct of globalization. Hopefully, the residues of racism that are surfacing will subside with time, as the new entrants have shown they can maintain high standards of quality and performance despite being born in a lower-income country.

-(Professor M.D. Nalapat is vice-chair of the Manipal Advanced Research Group, UNESCO Peace Chair, and professor of geopolitics at Manipal University. ©Copyright M.D. Nalapat.)

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