Earlier this week, I noted that the Daewoo land lease deal in Madagascar – under which the South Korean conglomerate secured the lease to one half of Madagascar’s arable land for, er, no money – had emerged as one of the main reasons for Madagascar’s recent coup d’etat, and that one of the first acts of the new President had been to cancel the deal.
Good for Madagascar, you might think: with luck, this will lead to food importing countries becoming a bit more intelligent about getting the politics and the social dimensions right when they negotiate such sensitive food security deals.
Or maybe not. Here’s the view of Chosun Ilbo, one of South Korea’s largest newspapers:
Er… nope, words just fail me.
So instead I’ll just quote what Ban Ki-moon – South Korea’s first Secretary-General of the United Nations – said when speaking to the Korean Parliament last summer:
My friends, Korea is not doing what it must … In truth, I’m somewhat ashamed as secretary-general that Korea is not doing what it should … I hope that Korea reflects on its current standing in the world and [resolves] to contribute more to the UN’s official development assistance [ODA] and its peacekeeping activities.
Looks like he has an uphill struggle on his hands…
Yesterday I did a post linking to a piece by Javier Blas in the FT, who had learned that Madagascar had agreed to lease half of its arable land – an area half the size of Belgium – to Daewoo, the South Korean conglomerate, for palm oil and corn production.
A few hours later, a truly astonishing new angle on the story emerged. Guess how much South Korea had paid for its 99 year lease? Answer: Zip. Zero. Nada. Not a cent. The sum total of the benefts for Madagascar, according to a Daewoo spokesman? “We will provide jobs for them by farming it, which is good for Madagascar.” This in a country where 3.5% of people are on WFP food aid…
Blimey. I’ve written here before about the growing importance of security of supply concerns in agricultural trade, and the fact that some countries – notably China – are seeking to forge long term purchase agreements with third countries, or indeed to lease or buy land outright.
But the news that South Korea has just struck a 99 year deal with Madagascar to lease an area half the size of Belgium to grow palm oil and no less than half of South Korea’s corn demands, is arresting nonetheless. As Carl Atkin, one of the authors of the Bidwells report on competition for land at the start of the year, comments in the FT: “The project does not surprise me, as countries are looking to improve food security, but its size – it does surprise me.”
As with previous projects along the same lines, the big question is whether developing countries (and particularly their poor people) will really benefit from such projects. After initially making very enthusiastic noises about the potential for such projects to bring vital investment to bear, the World Bank and the FAO are now sounding a notably more cautious note about who benefits from them, as Javier Blas’s excellent in-depth piece on the trend a few months back noted.
In the case of South Korea’s project, it looks as though benefits for the poor may be very limited indeed: although fully half of Madagascar’s arable land is to be leased, the labour is to be shipped in from South Africa.
Update: unbelievably, it turns out that South Korea acquired the lease for free – see this later post for more.
Just a quickie on the Madagascar coup from a Royal Africa Society talk I attended on Tuesday. According to Volatiana Rahaga, who is president of the Association of Malagasy Residents in the UK (all 100 of them), news of South Korea’s deal to buy up a large chunk of Madagascar’s arable land may never have filtered through to the public had it not been for a pesky FT journalist.
The FT’s Javier Blas reported on the deal when the negotiations had almost finished. Until then, nobody in Madagascar knew anything about it. When members of Ms Rahaga’s group read Blas’s article, they e-mailed the news to colleagues in France (which has a much larger Malagasy diaspora). The latter then told their friends and relatives back home about it, and the brown stuff promptly hit the fan. At first, the recently-ousted president, Marc Ravalomanana, denied that any such deal was going through; when he was eventually forced to tell the truth, it was too late. Everyone assumed the worst – that he and his cronies were making millions from the plan at the expense of the Malagasy public, who not only would not be compensated but would face an increased risk of food shortages once they surrendered all that farmland.
As an environmental consultant based in Antananarivo told me, this failure to communicate the deal doomed it, and public anger about the sell-off was partly responsible for the coup that deposed Ravalomanana this spring. In today’s wired up world, it seems, even authoritarian African governments can no longer count on a monopoly on information.
Very interested to see the news today that City of London police have “arrested the director of a Merseyside-based business in connection with an alleged plan to pay Liberian officials $2.5m (£1.7m) in connection with land concessions the company hoped would earn it more than $2bn”.
The thousand-fold disparity between what the British company was planning to pay and what it hoped to earn is obviously astonishing (and that’s before we take into account allegations that the Liberian government would apparently have been liable for making up any shortfall against the project’s anticipated earnings). It all brings back to mind the case of Daewoo’s disastrous attempt to lease one half of Madagascar’s arable land back in March last year – Global Dashboard coverage of that here.
This would appear to be landgrabbing at its worst: the host country gets screwed on the terms of the deal thanks to weak negotiation capacity and/or naked corruption, and poor people get few if any benefits (as well as the risk of getting turfed off community land that they may have had access to for years, but without having the formal ownership rights).
But two things are new and interesting this time round. First, the fact that this land grab is not about staple crops, nor about biofuels, but about carbon credits – specifically, forest credits for avoided deforestation, that can then be used by EU states or other Kyoto signatories to meet their emission targets.
As the FT observes this morning, the global carbon market is now worth $144 billion annually. That’s $20 billion more than total global aid flows. As the carbon market grows, we’ll see more and more problem cases like this – as David and I predicted in our scenarios (pdf) for future climate policy last year. The fact that land grabs are now taking place for carbon sequestration as well as crops and biofuels also underlines just how many different land uses are now competing for the world’s soil – expect this one to run and run.
The other novelty here is the fact that the deal led to an arrest on bribery charges. Land access deals tend to be opaque at the best of times – I’ve been looking at them as part of work I’ve been doing on resource scarcity with the World Bank, and evaluating their implications for governance, conflict risk and poverty reduction is far from easy. It’s often suspected that bribery of host country elites is part of the picture, but extremely hard to prove – and in any case, many investor countries will turn a blind eye, given their strategic interest in improving security of supply on key commodities. So more power to the City of London police’s elbow for sending a signal on this one – it’ll be interesting to see more details of the case as they emerge.
Above all, massive credit to Global Witness, long one of the most impressive NGOs on resource security issues. They’ve been saying for a very long time that the emerging global climate regime on reduced emissions from deforestation and forest degradation (REDD) needs to take far more account of governance and conflict risk issues (see their new report on this, out yesterday). That point has just been vindicated in spades. And on top of that, it was their information that led to yesterday’s arrest. Bravo.