British Petroleum (BP) Oil-spill anger unlikey to hurt US/UK ties

Oil-spill anger unlikey to hurt US/UK ties
BY ALICE RITCHIE:


LONDON, England (AFP) — US anger at oil giant BP is clouding ties with Britain's new Government only weeks after it took office, but poses little long-term threat to the 'special relationship', analysts say.

US President Barack Obama has ramped up the pressure on BP over the disaster, summoning chairman Carl-Henric Svanberg to Washington, criticising chief executive Tony Hayward and firing a warning over shareholder payouts.

BP's share price tanked last week under the strain and business leaders and politicians in London expressed concern about the impact on British pension funds that invest in BP as well as any backlash against other British firms.

"There is also growing concern that the president's angry rhetoric is going over the top and risks dividing the United States and the United Kingdom," former Conservative foreign secretary Malcolm Rifkind wrote in The Times.

Newspapers here demanded Prime Minister David Cameron stand up to Obama when the two leaders were scheduled to speak yesterday ahead of England's World Cup opener against the USA — which could itself strain ties further.

However, the US State Department and Cameron's Government played down suggestions of a rift, while analysts say the allies' primary concern remains their joint efforts in Afghanistan and over Iran's nuclear programme.

Much hailed in the British press, the historic "special relationship" with the United States has cooled since the close personal ties forged between ex-British premier Tony Blair and former US president George W Bush.

The Obama administration has stressed its close relations with a number of foreign nations, while Cameron's Government promised a close but "frank" relationship with Washington when it took office last month.

"This crisis has heightened that sense of distance, but I don't think in the end it'll have long-term damaging consequences," said Michael Cox, Professor of International Relations at the London School of Economics (LSE).

He acknowledged the pressure on BP was taking on a patriotic bent, noting the "peculiar" use of BP's old name, "British Petroleum", by the White House.

BP is far from a British firm any more — it employs 22,000 people in the United States and only 10,000 in Britain, while six of its directors are American and six British.

But Cox noted that Obama was under "a huge amount of domestic pressure" and "it's easier to direct attention to an apparently foreign company".

Amid fears of what BP will have to pay out for the oil-spill, US officials are looking to suspend shareholder dividends until compensation is paid.

But analysts at investment bank UBS say it is Obama's pressure as much as any economic fall-out from the spill that caused the share price to collapse last week.

"While progress on dealing with the spill continues, the share price falls now appear to reflect continued pressure from President Obama's administration, much of which appears to be politically motivated," a briefing note said.

Cameron's announcement Thursday that he would raise the issue with Obama "provides some (limited) support for BP", albeit "quite late in the day".

However, Cox suggested that the British premier would want to keep the issue "pretty down on the agenda" in his call with Obama, saying: "There are more important things" such as the Iranian nuclear crisis and Afghanistan.

Scott Lucas, Professor of American Studies at the University of Birmingham, agreed and said he believed the whole diplomatic spat was more in the heads of British newspaper editors than policymakers.

"There is animosity against BP's leadership, there's no doubt about that, because they didn't handle the situation well. But that animosity doesn't translate into a wider issue," he said.

British Deputy Prime Minister Nick Clegg also warned that bringing politics into the fray would not help the clean-up.

"I don't frankly think we will reach a solution to stopping the release of oil into the ocean any quicker by allowing this to spiral into a tit-for-tat political diplomatic spat," he said during a trip to Madrid Friday.

June 13, 2010

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