From landgrab to coup d’etat

Back in November last year, I blogged on the land lease deal agreed between Daewoo, the South Korean company, and the government of Madagascar, under which the former would lease fully one half of Madagascar’s arable land for a hundred years.  Soon afterwards, the news emerged that Madagascar would receive no payment at all for the lease – the only upside would instead be the prospect of some job creation.

Since then, of course, Madagascar’s government has fallen in a coup d’etat.  But what I hadn’t spotted until a US Department of Agriculture official mentioned it to me last week is the fact that the land deal was front and centre in what made the coup happen.  Here’s Tom Burgis in the FT on Saturday:

“Everything was a monopoly with [President] Ravalomanana,” says Naina, a 41-year-old wood chopper in one of the capital’s poorest neighbourhoods. “The country could not develop.”

The bombshell that turned the discontent into outright anger and so brought an end to Mr Ravalomanana’s rule was news of a deal between the government and Daewoo Logistics. This envisioned leasing vast tracts of Madagascar’s arable land to the South Korean conglomerate to grow crops that would be exported from a country where aid agencies were battling rural starvation. “It was the news that said Daewoo expected to pay nothing for the land that accelerated the trouble,” says one well-connected Malagasy banker who asks not to be named.

At a stroke, alienated members of the Malagasy elite found the banner to which they could rally an urban poor already struggling to cope with rice prices driven higher by the global commodity boom. They also found a figurehead in Andry Rajoelina, a 34-year-old former DJ who had married into Malagasy aristocracy and built the capital’s foremost billboard advertising operation …

Thousands took to the streets, whipped up by the Daewoo deal as the symbol of all that was ill. Protests turned to looting. Scores died as buildings burned. Then, in early February, Mr Rajoelina lead a boiling crowd from the main square to the gates of the state palace. Amid the confusion, the presidential guard opened fire.

By now we’re all well used to the idea that oil, diamonds, coltan, poppies and other high-value commodities can lead to a ‘resource curse’ in fragile states – for instance when the resource endowment ‘crowds out’ other sectors of the economy (e.g. through exchange rate rises), or props up poor governance.  Hitherto, though, only a few food crops – like coffee and cocoa – have been on the list of potential resource curse drivers.

I found myself wondering a couple of weeks ago whether the prospect of long term food price inflation and proliferating security of supply concerns  in places like China, South Korea and a raft of Gulf countries, might lead to growth in the pool of potential resource curse drivers.  Having seen the first government fall as the result of a landgrab deal, I think we now know the answer…