The New Colonialists

SUBHEAD: A new breed of colonialism is rampaging across the world, with rich nations buying up the natural resources of developing countries that can ill afford to sell.  

By a reporter on 09 August 2009 in the Independent -

 [IB Publisher's note: This is the first half of a lengthy article. Please use link above to read in its entirety.]

Image above: Farmland in Madagascar of interest to South Korea. From
Thousand of protesters took to the streets, waving the orange flags of the opposition. Before long, looting began. Buildings were set on fire.

 But the turning point came when a crowd moved from the main square towards the presidential palace. Amid the confusion, someone panicked and gave the order to the troops guarding the palace to open fire. Scores died. The leaders of the army decided they'd had enough and stormed the palace, causing the president to flee.

A typical African coup d'├ętat? Not quite. Certainly there were allegations of corruption in high places. The president had bought a private jet – from a member of the Disney family – for his own personal use. He was accused of unnecessary extravagance, of mismanaging public funds and confusing the interests of the state with his own. 

But something else had whipped up the protesters in Antananarivo, the capital of Madagascar, earlier this year, when the government of Marc Ravalomanana was overthrown in the former French colony. 

The urban poor were angry at the price of food, which had been high since the massive rise in global prices of wheat and rice the year before. Food-price rises hit the poor worse than the rest of us because they spend up to two-thirds of their income on food. 

But what whipped them into action was news of a deal the government had recently signed with a giant Korean multinational, Daewoo, leasing 1.3 million hectares of farmland – an area almost half the size of Belgium and about half of all arable land on the island – to the foreign company for 99 years. Daewoo had announced plans to grow maize and palm oil there – and send all the harvests back to South Korea. 

Terms of the deal had not originally been made public. But then the news leaked, via the Financial Times in London, that the firm had paid nothing for the lease. Daewoo had promised to improve the island's infrastructure in support of its investment. 

"We will provide jobs for them by farming it, which is good for Madagascar," a Daewoo spokesman said. But the direct cash benefit to Madagascar would be zero – in a country which can barely produce enough food to feed itself: nearly half of the island's children under the age of five are malnourished. 

The government of President Ravalomanana became the first in the world to be toppled because of what the United Nations' Food and Agriculture Organization recently described as "landgrabbing". The Daewoo deal is only one of more than 100 land deals which have, over the past 12 months, seen massive tracts of cultivable farmland across the globe bought up by wealthy countries and international corporations. The phenomenon is accelerating at an alarming rate, with an area half the size of Europe's farmland targeted in just the past six months. 

To understand the impotent fury that provokes in impoverished farmers, consider the reaction if something similar happened in Britain. 

The international development policy consultant Mark Weston has a vivid image to help: "Imagine if China, following a brief negotiation with a British government desperate for foreign cash after the collapse of the economy, bought up the whole of Wales, replaced most of its inhabitants with Chinese workers, turned the entire country into an enormous rice field, and sent all the rice produced there for the next 99 years back to China," he suggests. 

"Imagine that neither the evicted Welsh nor the rest of the British public knew what they were getting in return for this, having to content themselves with vague promises that the new landlords would upgrade a few ports and roads and create jobs for local people. 

"Then, imagine that, after a few years – and bearing in mind that recession and the plummeting pound have already made it difficult for Britain to buy food from abroad – an oil-price spike or an environmental disaster in one of the world's big grain-producing nations drives global food prices sharply upwards, and beyond the reach of many Britons. 

While the Chinese next door in Wales continue sending rice back to China, the starving British look helplessly on, ruing the day their government sold off half their arable land. Some of them plot the violent recapture of the Welsh valleys." 

Change the place names to Africa and the scenario is much less far-fetched. It is happening already, which is why many, including Jacques Diouf, head of the United Nations Food and Agriculture Organization, has warned that the world may be slipping into a "neo-colonial" system. 

Even that great champion of the free market, the FT, described the Daewoo deal as "rapacious" and warned it is but the most "brazen example of a wider phenomenon" as rich nations seek to buy up the natural resources of poor countries. 

The extent of this new colonialism is vast. The buyers are wealthy countries that are unable to grow their own food. The Gulf states are at the forefront of new investments. 

Saudi Arabia, Bahrain, Kuwait, Oman, Qatar – which between them control nearly 45 per cent of the world's oil – are snapping up agricultural land in fertile countries such as Brazil, Russia, Kazakhstan, Ukraine and Egypt. But they are ' also targeting the world's poorest countries, such as Ethiopia, Cameroon, Uganda, Zambia and Cambodia.

The amounts of land involved are staggering. South Korean companies have bought 690,000 hectares in Sudan, where at least six other countries are known to have secured large land-holdings – and where food supplies for the local population are among the least secure anywhere in the world. 

The Saudis are negotiating 500,000 hectares in Tanzania. Firms from the United Arab Emirates have landed 324,000 hectares in Pakistan. 

But they are not the only buyers. Countries with large populations such as China, South Korea and even India are acquiring swathes of African farmland to produce food for export. 

The Indian government has lent money to 80 companies to buy 350,000 hectares in Africa and recently lowered the tariffs under which Ethiopian agri-products can enter India. One of the biggest holdings of agriculture land in the world is a Bangalore-based company, Karuturi Global, which has recently bought huge areas in Ethiopia and Kenya. 

Food is not all the new colonialists are after. About a fifth of the massive new deals are for land on which to grow biofuels. British, US and German companies with names such as Flora Ecopower have bought land in Tanzania and Ethiopia. 

The country whose name became a byword for famine at the time of the Live Aid concerts has had more than 50 investors sign deals or register an interest in the cultivation of biofuel crops on its soil.

From Ethiopia's point of view, the economic logic is straightforward: the country is an importer of oil and is therefore vulnerable to price fluctuations on the world market; if it can produce biofuels it will lessen that dependency. 

But at a cost. 

To keep the foreign biofuel investors happy, the government doesn't force any companies to carry out environmental impact assessments. Local activists claim that 75 per cent of the land allocated to foreign biofuel firms are covered in forests that will be cut down. 

More worrying is the plan by a Norwegian biofuel company to create "the largest jatropha plantation in the world" by deforesting large tracts of land in northern Ghana. Jatropha, which can be cultivated in poor soil, produces oily seeds that can produce biodiesel. 

A local activist, Bakari Nyari, of the African Biodiversity Network, has accused the company of "using methods that hark back to the darkest days of colonialism... by deceiving an illiterate chief to sign away 38,000 hectares with his thumbprint". 

The company claims the scheme will bring jobs, but the extensive deforestation which would result would deprive local people of their traditional income from gathering forest products such as shea nuts. 

The failed Daewoo land deal in Madagascar may have been intended to be the biggest landgrab planned to date, but it is far from the only one. 

So what is the cause of this sudden explosion of land acquisition across the globe? It has its roots in the food crisis of 2007/8, when prices of rice, wheat and other cereals skyrocketed across the world, triggering riots from Haiti to Senegal. 

The price spike also led food-growing countries to slap export tariffs on staple crops to minimise the amounts that left their countries. That tightened the supply still further, meaning food prices were driven up more by a situation of policy-created scarcity than by supply and demand. 

This situation also made many rich countries that are reliant on massive food imports question one of the fundamentals of the global economy: the idea that every country should concentrate on its best products and then trade. Suddenly having unimaginable quantities of cash from oil was not enough to guarantee you all the food you needed. 

The oil sheikhs of the Gulf states found that food imports had doubled in cost over less than five years. In the future it might get even worse. You could no longer rely on regional and global markets, they concluded. The rush to grab land began. 

The logic was clear. The highly populous South Korea is the world's fourth-biggest importer of maize; the Madagascar deal would replace about half of Korea's maize imports, a Daewoo spokesman boasted. 

The Gulf states were equally open: control of foreign farmland would not only secure food supplies, it would eliminate the cut taken by middlemen and reduce its food-import bills by more than 20 per cent. 
And the benefits could only increase. The fundamental conditions that had led to the global food crisis were unchanged, and might easily worsen. The UN predicts that by 2050, the world population will have grown by 50 per cent.

 Growing the food to feed nine billion people will place enormous pressure on the Earth, eroding soils, denuding forests and draining rivers. Climate change will make all that worse. Oil prices will continue to rise, and with them the cost of fertiliser and tractor fuel. Demand for biofuels would further cut land available for food crops. 

The 2007/8 price crunch might just be a foretaste of something worse. The times of plenty are already over. Next, there might not be enough food to go round, even for those with lots of money.


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