The Geopolitics of (Colour) Raw materials

Dizzying… is the word and the feeling that comes to my mind the most in recent years. During the Corona years, the terrible war in Ukraine, the horrible attack in Israel, the inhumane situation in Gaza afterwards and the recent developments in Iran. It brings to the surface the global interconnectedness and associated power relations in the world. The decades-long journey of all major companies towards China with the subsequent dependence (more than 80% of all raw materials) on it, the energy prices that can skyrocket with every action that happens somewhere in an oil-producing or transporting country, which also trickles down to almost every product that we (want or have to) buy and even the fact that Corona (and possible future viruses) could become a pandemic – and not a national or regional epidemic – is largely due to the global coherence and mobility.
Life brings out the good in people, but it also exposes what is sometimes so terribly wrong with “humanity”.

I often wonder what the role of the government, both in Netherlands and Europe (my region), is in this. My thesis is that a government has a much more crucial contribution than some economists say. I do know that consumers and companies are the most important drivers of the economy, what is “hot” and what is “not”, which trend becomes successful, which innovations break through. But governments are able to facilitate the making and breaking of developments. Just look at the “nitrogen” crisis and how our country (as some say) is at a standstill because of it: houses that cannot be built, companies that are waiting in line to be connected to the energy network, companies that do not come to Rotterdam and existing companies that do not expand... I will not get into the discussion of what causes all this (you could devote 3 blogs to it), but with a government that does not choose and does not provide a (mid-long term) vision and direction this can ultimately lead to choices being made by consumers and companies and from their own perspective... and whether we benefit from this, for a broad group within society, or whether we achieve more well-being for all citizens is the question.

View the role that Dutch and European governments have played in the many years of cutbacks on (and spending too little anyway on) defence, the decade-long “faith” in the immense defence of America (which by the way has benefitted it hugely!), now “suddenly” a lot of money has to be spend on defence with a budget that was entirely focused on having to spend as little as possible for defence (Netherlands: post-war years dropping from 4% to the low point around 2014 with just over 1% of GDP). Who would (and wanted to) take into consideration a President who no longer accepts this dependency and acts on it?

View the role of Dutch and European governments in the previously reported exodus of companies, including colour raw materials, to China. Salaries were much lower and it suited everyone that all those polluting factories had left Europe, nuisance mines were closed and the rules and legislation (ECHA, REACH) were tightened to such an extent that a return became almost impossible. Who would have thought (wanted to think) that this high dependence on China would hit us like a boomerang in all kinds of geopolitical issues. President Trump might want to impose all kinds of tariffs on China, but if China does not or less supply for example the rare earth metals (which it has actually done) he is powerless in the negotiations (at least for the short term). And the same applies to Europe in its desire to support the recycling sector, for example by discouraging government-subsidised cheap virgin materials from China.

But also view the role of governments during the Corona years, where initially it was still “every man for himself” and a wait-and-see attitude, but eventually the leading role of governments has facilitated the development and rollout of successful vaccines within a year!

My thesis is that governments should return to their core activities and much less micro-managing: have a vision of where you want to go with this country (or region), set out the broad lines, facilitate companies to do their work and innovate and protect the well-being of all citizens.
In my opinion, this requires that our governments, where often well-meaning and driven people work, rely more on skilled experts, respect the rule of law and authoritative institutions, protect good journalism, and even motivate it, and stimulate cohesion in society with respect for every citizen.
Although not everyone will agree with this, mistakes have certainly been made and it has been a period of great uncertainty and suffering, for me the Corona years remain a positive example of how our society, with cooperation between citizens-companies-institutions-journalism/media-government, can function.

The old saying of “Governing is foreseeing” (dutch saying google translated) is easy to say, but rarely executed. And this is certainly also visible in my field of colour and subsequently the colour raw materials. There are enormous shortages (whether or not artificially generated), prices are skyrocketing and the competitive struggle sometimes has painful consequences (bankruptcies, mergers, takeovers, enormous increase in investment companies).

For this, it is necessary that each region is sufficiently independent and can produce its own products and services, that there is more balance in the dependence on other regions (is 40% a good direction?). And perhaps then the, mostly, men (!) of this world can discuss with much less geopolitical fuss and meet each other on the basis of equality and where necessary negotiate.
And perhaps then we can also return to the path of an international order based on law (and justice) and not on power.