An intense, high-stakes competition is currently underway for possession of the immense steel firm Arcelor—which operates in France and Belgium. Dr. Bill Belew of PanAsianBiz discusses the two principal competitors who are trying to buy out Arcelor: Russian Steel Co. Severstal (“Northern Steel” in Russian) and Mittal. Severstal’s CEO Aleksei Mordashov has offered $16.5 billion for Arcelor; if he succeeds, he will create the world’s largest steel company—comprising 6% of world steel production. Mittal, however, remains a tough competitor, backed by the prominent Goldman Sachs Investment Bank. The board of directors of Arcelor presently seems to be equally hostile to both bids, so three alternatives are possible: Severstal will acquire Arcelor, Mittal will acquire Arcelor, or Arcelor will remain autonomous.

Mordashov’s quest to obtain a French/Belgian company is not only economically wise; it is also politically wise. Russian President Vladimir Putin has recently shown his true colors as a neo-communist sympathizer; Putin has suppressed regional elections and—worse—nationalized Russia’s top oil company, Yukos, led by Mikhail Khodorkovsky, one of the most vocal critics of Putin’s politics. The ambitious, industrious, and virtuous Khodorkovsky is now behind bars, the fruits of his labor seized by the Russian government under Putin’s orders.

Mordashov would do well to seek to avoid Khodorkovsky’s fate by holding assets outside of Russia and therefore beyond the ability of Putin’s government to seize. If he acquires Arcelor, Mordashov would be able to rely on vast French and Belgian assets in the event that Putin decides to nationalize Severstal. Whether or not he acquires the firm, we should hope that he escapes political persecution and economic strangulation.

G. Stolyarov II is a science fiction novelist, independent philosophical essayist, poet, amateur mathematician, composer, contributor to Enter Stage Right, Le Quebecois Libre, Rebirth of Reason, and the Ludwig von Mises Institute, Senior Writer for The Liberal Institute, and Editor-in-Chief of The Rational Argumentator, a magazine championing the principles of reason, rights, and progress. His newest science fiction novel is Eden against the Colossus. His latest non-fiction treatise is A Rational Cosmology. Mr. Stolyarov can be contacted at gennadystolyarovii@yahoo.com.

See Dr. Belew's blog, PanAsianBiz, for news and discussions about business and current events in Russia and Asia.

This TRA feature has been edited in accordance with TRA’s Statement of Policy.

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Learn about Mr. Stolyarov's novel, Eden against the Colossus, here.