Arab States’ Global Reach: Smart Investing or ‘Neo-Colonialism’ ?

Via Seed Daily, an article on the acquisition strategy of the Kuwait China Investment Company, a company partly owned by the emirate’s sovereign wealth fund which is preparing to join other Gulf states in buying up agricultural land in Asia, part of a global land grab to ensure food security.¬† As the article notes:

“…Unlike the governments and corporations in the Gulf that have been acquiring vast tracts of arable land, mainly in poor countries of Africa, Asia, Latin America and Eastern Europe, to produce food for their own people, the Kuwait China Investment Co. wants to invest on a purely commercial basis, selling its produce to anyone who can pay for it.

“We think it’s an opportune sector that will help Asia effectively become the breadbasket of the world,” Ahmad al-Hamad, managing director of KCIC, said this week.

“We think food security, in the long term, is better served by collaborative investment in Asia as opposed to security crops exclusively for one country.”

But others see danger ahead. Jacques Diouf, director general of the U.N. Food and Agriculture Organization, has warned that the headlong drive by rich food-importing countries to buy up vast tracts of farmland in the world’s poorer states risks “creating a neo-colonial” agricultural system.

The land purchases by the wealthy Gulf states, spearheaded by Saudi Arabia, were triggered by the global food crisis of 2008. High prices led to food riots in several countries and thrust food security to the front of the world’s political agenda.

At the Group of Eight summit in L’Aquila, Italy, on July 10, the world’s leading industrialized nations launched a $15 billion initiative to help farmers in poor countries boost production over the next three years. That marks a significant shift in how the West plans to tackle world hunger, but it’s unlikely to curb land grabs by some of the world’s wealthiest states.

Shrinking water resources, growing populations and little arable land are forcing the Gulf states and other Arab countries to spend billions of dollars to acquire hundreds of thousands of acres of farmland abroad to ensure long-term food security.

“For the Gulf countries‚Ķ under current technology, it’s impossible to guarantee their food security internally because they lack water resources and arable land,” said Mohammed Raouf, program manager of environmental research with the Gulf Research Center, a Dubai think tank. So land acquisition abroad “is the best policy to follow now.”

Lennart Bage, president of the U.N. International Fund for Agriculture Development in Rome, says that land was long considered less important than oil or mineral resources.

But now, with food prices having doubled on average from a year ago, “fertile land with access to water has become a strategic asset.”

Countries in the Middle East and North Africa with limited arable land have to import most of their food. And the cost of those imports has mushroomed from $16 billion in 2006 to $20 billion in 2007, according to the Arab Organization for Agricultural Development.

By acquiring farmland abroad and shipping the produce home without providing any to the countries where they are operating, the Arab states could cut food prices for their own people by 20 percent to 25 percent through bypassing world markets.

But many of the countries whose farmland is being snapped up are already unable to feed their own people, and it may be just a matter of time before that triggers anti-government unrest and the resource wars that many fear will erupt in the coming decades.

“Where once they used gunboats and sepoys, the rich nations now use chequebooks and lawyers to seize food from the hungry,” George Monbiot, a leading environmentalist and academic, wrote in Britain’s Guardian newspaper.

“The scramble for resources has begun, but — in the short term at any rate — we will hardly notice. The rich world’s governments will protect themselves from the political cost of shortages, even if it means that other people must starve.”

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at and frontier investment markets at