Hamish McRae: Globalisation is fine, unless it means Dubai

Instead of 'us' trying to take over 'them', 'they' are taking over 'us'. And we don't find that easy to accept

A Dubai company seeks to buy a British one that happens to operate a string of ports in the US - much to the annoyance of some US congressmen. An international steel group headed by an Indian family seeks to buy a French/Luxembourg steel company, much to the chagrin of President Chirac. A Russian energy group is said to be trying to buy a British gas company, which would certainly cause the fur to fly here. Welcome to globalisation, 2006-style.

There have been several waves of globalisation over the past half century. There was the international expansion of mostly-US companies, coining the expression "multinationals". There was the onslaught of Japan on the motor and electronics industries, first by exporting and then by building local plants. Most recently, there has been a wave of cross-border takeovers in Europe, frequently of public utilities.

Now, however, this process has taken a new twist. Instead of the bids coming from the old powers of the established developed world, they are coming from the new powers of the Middle East, India, Russia and China. Instead of "us" trying to take control of "them", "they" are trying to take over "us". And I don't think we'll find that at all easy to accept.

There are always winners and losers from great international economic shifts. Here in Britain we have become accustomed to losing manufacturing jobs to lower-cost competitors, and continental Europe is now having the same experience. But overall living standards have risen in the UK, and other jobs have been created. It may not be pleasant to lose national control of an entire industry, such as motor manufacturing, but in Britain it is generally accepted that this has been for the best. Right now, a Chinese company has been welcomed in its efforts to restore something of the old Rover group, though it does not seem to have been making a huge amount of progress.

Elsewhere in the developed world, countries have not been quite so open. Within Europe there ought not to be any significant barriers to non-national takeovers and mergers but, in practice, the UK is unusually open to foreign investment in a way that, say, Germany or France is not.

As for the US, it is very uneven. UK and European companies can buy a large bank (as HSBC has done), oil company (as has BP) or motor group (Daimler-Benz and Chrysler). But they cannot buy an airline - not that they would probably want to - and last year a Hong Kong-based oil company that was part owned by the Chinese state was blocked in a bid to buy a smallish Californian independent oil company.

The central point here is that while the buyers are from the rest of the developed world, countries accept with varying degrees of grace that foreign companies should be free to arrive waving cheque books. International investment was mostly a club of the rich world, run by rules the rich world set to suit itself.

Outsiders were allowed to become associate members, with the oil-rich Middle Eastern countries buying a lot of shares in British and US companies. But you did not have China, India or Russia trying to join in because they were not rich enough.

That has all changed. Power has shifted towards the new rich. China last year passed the UK and France to become the world's fourth largest economy. India will pass the UK some time in the next decade. Russia, while uneven because it is vastly over-dependent on its energy industries, could pass us about the same time as India. This changes everything. What we are seeing now are just the first signs of the West's discomfort. In the case of the Dubai bid, P&O happens to run terminals in New York, Baltimore, Philadelphia and other US ports.

Now Dubai is perhaps the most stable and successful of all the Arab states. Dubai Ports World, which is making the bid, runs a hugely successful operation. Both the White House and the US Treasury have given their approval. But some members of Congress, including the head of the House Homeland Security Committee, think otherwise.

"In the post 9/11 world," said Representative Peter T King, "there should have been a presumption against this company." He is not alone, for there are several other members of Congress who are trying to hold up the deal. If it does go through, which it probably will eventually, it will be in sharp contrast to the Chinese bid for Unocal, the California oil company, last summer. Then, congressional pressure blocked the bid on a mixture of grounds including the threat to national security and the fact that the bidder was part-nationalised.

So it was fine for British-owned P&O to own US ports, and fine for British-owned BP to buy much larger US oil groups. But what is OK for a British or German, maybe even French, company is not so OK for a Middle Eastern or Chinese one.

Before blaming the Americans overly, consider the French reaction to Mittal Steel's bid for Arcelor. Mittal is not really an Indian company, though it happens to be controlled by an Indian family, and Arcelor is not really a French company for it is formally based in Luxembourg, whose government is its largest single shareholder. But it has a lot of workers in France. So President Chirac said that the bid was fine "in principle", which of course is a very French way of saying that it is not at all right in practice. Again I suspect that the bid will eventually go through but the discomfort is evident.

Now consider what might happen were Gazprom, the Russian former monopoly gas supplier, to buy Centrica, part of what was once British Gas. It is not at all clear whether this is really a runner, but Centrica shares were shooting upwards yesterday so clearly something is in the wind. (There was a German bid for a Spanish utility so maybe that was the thing that excited shares in the sector.)

At any rate, the point here is this: would we really have our local gas supplies directly controlled by the Russians, given the way they behaved over Ukraine a few weeks back? Rationally the sensible thing for this country to do is to try to secure a wide range of alternative energy sources, and that would be much harder to do if Gazprom owned Centrica. But were the bidder German or American, we would feel much more relaxed.

The world has not had to confront these problems. How do you frame a regulation that says "We trust you but we don't trust you", without making direct national distinctions? While we had the power, all was hunky-dory for us, though maybe not so much fun for developing countries that had to live with the commercial clout of the West's multinationals. For a while yet, the developed world still runs the show, but at some stage we will begin to recognise that we will no longer be in charge. And we are getting a small taste of that right now.