Powerful lobby found friend in the White House

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A donation worth $600,000 to fund lobbyists pressing for American trade sanctions on steel imports is at the centre of the latest row surrounding Tony Blair's links with the billionaire industrialist Lakshmi Mittal, who gave £125,000 to Labour before the 2001 election.

Ispat Inland, part of Mr Mittal's international LNM Group, gave the sum to Stand up for Steel, a pressure group urging President George Bush to impose tariffs of 40 per cent on all steel imports to the United States.

Steel industry figures fear that the imposition of tariffs in the United States will block exports from British steelmakers such as Corus and divert cheap imports into the European market, putting further pressure on the UK steel industry. Mr Mittal's Chicago-based company, America's sixth biggest steel producer, has donated heavily to both the Democrat and Republican parties.

The LNM Group, which has 60,000 employees worldwide but only 100 in Britain, insists that each part of its global empire lobbies for its own interests. But the company's actions are in direct opposition to the British Government and the European Union.

Mr Blair was criticised last month for backing Mr Mittal's bid to buy the state-owned Sidex steel works in Romania. Downing Street rejected suggestions that the plant would compete with Corus, formerly British Steel. But Mr Mittal's support for US tariffs challenges Mr Blair's claims that support for Mr Mittal was in Britain's interests.

The Stand up for Steel coalition dates from 1998 when steel workers in the Ohio Valley started challenging imports of cheaper foreign steel from South Korea, which they believe posed a threat to the survival of domestic production. They warned of a "silent but deadly threat" from foreign imports.

The campaign gathered momentum and took on a national scope. There were petitions and letters asking for help sent to the former President Bill Clinton. The powerful steel lobby found a friend in President George Bush, who last year launched a trade investigation aimed at stifling import competition, something Bill Clinton had refused to do.

Last month, the Stand up for Steel coalition called 25,000 steel workers and their families on to the streets of Washington to step up pressure on the president.

Some special interest groups inside America are furious that President Bush has been railroaded by the steel lobby into a move that could affect millions working in industries ranging from car production to heavy engineering. But the lobbying cry is popular in many parts of America. Mid-term elections are due in November, when the votes of steel-making states, such as Pennsylvania and Ohio, may prove crucial.

But the power that has made the lobbying group influential in Washington has caused a severe headache for Mr Blair, who is faced with claims that he has supported a businessman who backed lobbyists campaigning against British and European trade.