Inside the Barley Republic: Ethiopia’s land on fire sale

Alemayehu G. Mariam | June 10th, 2009

By Alemayehu G. Mariam

Our (Home) land on Fire sale

A while back, the capo di tutti capi (the “boss of bosses”) of the dictatorship in Ethiopia rebuked Congressman Donald Payne for pushing H.R. 2003 (“Ethiopia Democracy and Accountability Act”). He quipped with his signature sarcasm, “Ethiopia, this government and this country, are incapable, unwilling and unable to be run like some kind of banana republic from Capitol Hill or anywhere else.” That is not exactly true today. The evidence shows that “Ethiopia and this government” are “capable, willing and able to be run like some barley republic from Jeddah or any of the other Gulf states.” It has been widely reported that Saudi and other Gulf “investors” have spent over two hundred million U.S. dollars to buy (“lease”) fertile Ethiopian farmland free of local taxes and other requirements to supply themselves with a cornucopia of agricultural commodities which, oddly enough, they could purchase on the world market at competitive prices. It seems the desert sand has trumped the fertile land in the barley republic.

There are many bewildering things about this sordid multimillion dollar land deal. First, as the dictators are orchestrating a fire sale of chunks of the country to foreign governments fronting as “investors” and lining their pockets, nearly a quarter of the Ethiopian population is teetering on the brink of famine. The rest of the population is menaced daily by malnutrition and hunger. Second, the dictators are bending over backwards to insure food security in the “investor” countries while Ethiopia’s food insecurity is causing frantic alarm in the rest of the world. For the past year, the UN Food and Agricultural Organization has been calling for immediate steps to be taken to protect the poor in Ethiopia from skyrocketing food prices. Just last week the U.N World Food Program issued an advisory estimating that the national relief program for Ethiopia will fall nearly 178,000 metric tons short of assessed needs for the second quarter of the year. Third, to add insult to injury, the same dictatorship, after engorging itself with the proceeds of the ill-gotten loot from the so-called “investors”, will shamelessly stand at the gates of the World Food Programme, the U.S. Government, the European Union and other donor countries panhandling for food aid. Such is the brazen audacity of dictatorship!

Everyone in the world is perplexed by this new mercenary land hustle taking place in Ethiopia. The Economist magazine, that unwavering bastion of conservatism and defender of free trade and globalization, wondered in total bafflement: “… Are these ‘land grabs’, ‘neocolonialist’ rip-offs, different from 19th-century colonialism only because they involve different land-grabbers and enrich different local elites?” Even the left-leaning Independent newspaper expressed righteous indignation: “Over the past few months, Saudi Arabian investors have paid $100m for an Ethiopian farm where they hope to grow wheat and barley, adding to the millions of acres they already own in the war-ravaged country… Neo-colonialists are buying up agricultural land in Africa and local farmers could be crushed unless there are international rules to protect them…” Agricultural experts worldwide have also chimed in to condemn such one-sided secret deals arguing that the deals ultimately serve to water the deep roots of the culture of corruption among Africa’s kleptocratic dictatorships than materially contributing to its development.

Anatomy of the Sale of Ethiopia

Time was when foreign private companies bought land from private owners in the developing countries and created large scale plantations. In the “banana republics” of Central America, multinational corporations exploited a large, impoverished peasant class by creating a dependent and subservient local oligarchy. American fruit companies eventually became powerful enough to dominate the entire export sector of these countries and own and operate key infrastructures such as railways, mining and ports.

What we are witnessing in countries like Ethiopia today is an extreme form of the banana republic syndrome. In the barley republic, the aim is to create a foreign enclave economy (completely and totally isolated and insulated from the local economy) in the host country with the singular purpose of extracting agricultural commodities for export back to the “investor” countries. The farms to be established on the acquired lands are expected to be high technology driven using high yield seeds, modern pesticides and other production systems. The “agricultural clusters” that are expected to be developed will have little connection to the host country’s broader economy. They will contribute very little to the development of a skilled work force at the local level, and local workers will be relegated to menial jobs that require minimal training. There will be few environmental standards for these “investors” to uphold, and there is no way to monitor the damage they are likely to cause to the local ecosystem. In short, in the enclave economy of the barley republic, there will be little “spillover” or “ripple” effect on the local or national economy; and there will be miniscule net gains to the host countries from the “investments” (except the millions of dollars that will line the pockets of the corrupt dictators). For Ethiopia’s wretched poor and hungry, it will all be a surreal experience: They will be standing by the dusty roadsides watching helplessly as the endless caravan of diesel trucks shuttle back and forth delivering the harvest of barley, wheat and rice to port for shipment.

The dictators in Ethiopia naturally want to conceal the corrupt and mercenary nature of the land deals. They say they are just attracting foreign direct investment which will result in a stable source of capital, boost national income and local employment while reducing the country’s debt load. Is that even theoretically possible in an enclave economy?

According to a study prepared by the Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD) and the International Institute for Environment and Development (IIED), it is obvious that the whole land deal is an elaborate swindle, a scam, a shell game [1]:

In Ethiopia, for example, enquiries at the state-level Oromia investment promotion agency found evidence of some 22 proposed or actual land deals, of which 9 were over 1,000 ha, in addition to the 148 recorded at the national investment promotion agency. It is possible to speculate that state-level agencies in other Ethiopian states may also have records of additional projects, and that some land acquisitions may not have been recorded at all….For example, in Ethiopia information about the land size of many deals proposed or concluded in 2008 was missing….

In another instance, “an investment by German company Flora EcoPower in Ethiopia was reported to involve 13,000 ha (hectare), while it is recorded at the Ethiopian investment promotion agency for 3,800 ha only.”
To avoid public scrutiny and ward off local opposition, the dictatorship intentionally and fraudulently misclassifies all land sold to foreign governments as vacant “wastelands” implying that the land is unused, unoccupied by anyone or just wilderness. In fact, the so-called “wasteland” often supports herders who graze animals on it and people who have farmed it for generations. The dictators ignore the customary rights of the local people to satisfy their voracious appetite for foreign-investment deals to line their pockets. There is also evidence to suggest that smallholders have had their arms twisted to sign away their rights for insignificant compensation. According to the above-referenced study:

In Ethiopia, for example, all land allocations recorded at the national investment promotion agency are classified as involving “wastelands” with no pre-existing users. But this formal classification is open to question, in a country with a population of about 75 million, the vast majority of whom live in rural areas. Evidence collected by in-country research suggests that at least some of the lands allocated to investors in the Benishangul Gumuz and Afar regions were previously being used for shifting cultivation and dry-season grazing, respectively.

Although the dictatorship claims that the so-called land leases are determined by the regional governments, the evidence proves conclusively otherwise:

Most documented land leases are granted by the government. This includes 100% of documented
cases in Ethiopia.

The dictatorship’s claim that the land deals bring prosperity and jobs to the local economy is simply false. The evidence actually shows that the “investors” are ripping off the country blind in broad daylight:

In-country research confirms the general impression that land fees are low in monetary terms and an unimportant component of negotiations. In Ethiopia,rent was required in four deals out of the six projects examined in greater detail, with prices ranging from US$ 3 to 10 per hectare per year. These fees are low in the international context, though land rentals are going up (in the Ethiopian state of Oromia, for instance). Several deals – including the contract from the Benishangul Gumuz Regional State, examined by this study – involve five-year exemptions from land fees (article 4(a) of the Benishangul Gumuz contract)…. In Ethiopia, for example, profit tax (estimated at US$ 20 per hectare per year) is usually exempted for a period of 5 years; for a total of 602,760 ha allocated to documented projects, it is estimated that the exemption of this tax for each project over 5 years amounts to US$ 60,276,000.42.

This is the deal that made it possible for the king of Saudi Arabia a few months ago to celebrate the delivery of the first fresh harvest from his lush farms in Ethiopia.

The Scramble for Africa Redux?

It is a historical irony that Ethiopia should escape and successfully defend its sovereignty and independence during the European scramble for Africa in the late 19th Century and again in the last century against Italian colonial aggression only to become the first casualty of a newfangled neocolonial agricultural scramble. The historical parallels are obvious: In its early stages, European imperialism planted its economic tentacles in Africa by sending out its explorers, adventurers and merchantmen. The gunboats and armies showed up later. In the kinder and gentler world of petrodollar neocolonialism, there is no need for gunboats. The weapon of choice is a slush fund of petrodollars and so-called sovereign-wealth funds directed at corrupt and thieving African dictators and politicians who are able, willing and ready to sell out chunks of their countries for pennies. In this brave new world of petrodollar neocolonialism, neither the corrupt dictators nor their bankrollers care about the consequences of their deals on the local population, the displacement of local farmers and herders or adverse environmental impacts.

Last May, Tekleab Kebede, “Ethiopian Consul General” in Saudi Arabia, sought to bless the Saudi land deal by saying: “After all, the relations between Saudi Arabia and Ethiopia are longstanding. There is geographical proximity and the religious values and linguistic affinities that we share have brought the two countries close and strengthened the bonds. So, Saudis should have no hesitation in turning toward Ethiopia for investment.” That may be polite diplomatic palaver, but historically it is untrue. It is a fact that Saudi Arabia provided substantial material and moral support to secessionist elements in Ethiopia in the not too distant past. It also supported Somalia diplomatically and materially in its invasion of Ethiopian territory in 1977. Ethiopia’s supposed “special relationship” with Israel and other matters of religion have been a cause of ongoing irritation for the Saudis in their relations with Ethiopia.

The simple point is that this runaway land deal with the Saudis and the Gulf states needs to be scrutinized carefully for its broader implications. Is this ever expanding land deal a Trojan Horse used by the Saudis and the Gulf Shiekdoms for a broader thrust into Ethiopia? Are these “investments” the first elements of a grand strategic calculus to penetrate and dominate the Ethiopian economy and society? Or is it merely a benign search for land to raise crops, which by all accounts can be purchased on the world market at very competitive prices? Here the experience of the banana republics is instructive. The multilateral companies that invested in Central America, the Caribbean, Colombia, Ecuador and other places initially produced and exported bananas, pine apples, coffee and other commodities. Over a period of time, through their control of the large plantations, they managed to place a chokehold on the local oligarchies who depended almost entirely on the cash flow provided by the multinational agri-businesses. As history shows, it did not take long for the foreign “investors” to own and operate the rail, trucking, ports and banking systems in those countries. History also shows that the social upheavals in the banana republics which occurred in reaction to the oppressive alliance of the oligarchies and multinationals resulted in atrocities that lasted for decades in those countries.

Is this the bright future that awaits the brave Barley Republic of Ethiopia?

Resistance to Land Swindles

Not everyone is taking it lying down. Recently, the government in Madagascar was overthrown in large part because of public anger over a secret deal by the deposed ruler to hand over to a South Korean company one million hectares of Madagascar to grow maize. Marc Ravalomanana, the deposed president, initially denied the existence of a secret land deal. He and his cronies were expecting to pocket millions of dollars from the deal until the coup disrupted their plans. The interim president Andry Rajoelina rejected the deal declaring that, “In the Constitution, it is stipulated that Madagascar’s land is neither for sale nor for rent, so the agreement with Daewoo is cancelled.” Interestingly, the South Korean company had “promised to spend $6-billion in the next 20 to 25 years to help build infrastructure such as roads, railways, a port and schools in exchange for developing huge swathes of arable land in Madagascar.” The Maize Republic of Madagascar was not to be! (It is worth noting that Madagascar is ranked 143/176 on the U.N. Development Program Human Development Index (which measures life expectancy, literacy, education, GDP per capita in 176 countries in the world). Ethiopia ranks 169/176. Local opposition is brewing in Zambia against a proposed Chinese plan to acquire 2million hectares for a biofuels project. Kenyan farmers are demanding to produce the commodities themselves and export it to Quatar instead of working as menial farmhands.

The Real Questions

There are many basic questions that need to be answered: Should a country teetering on the verge of famine and starvation engage in large-scale shady land leads in secrecy and without public discussion? Has Ethiopia become a Crookdom where a small oligarchy of crooks is free to do whatever it wants? Do these land agreements have any validity under international law? What safeguards are in place for the environment and the rights of the indigenous people?

There are some economists who suggest that a country like Ethiopia that is perpetually afflicted by food shortages will eventually explode as in the case of Madagascar. Others plead for implementation of interim measures to protect the local people and ecosystem by some international standards or code of conduct. Still others argue that technologically sophisticated large farms could never work in Africa. They say history shows that such efforts “have often ended with abandoned machinery rusting in the returning bush.” In the long run, it is said, peasant farming will trump advanced commercial farming. What is clear in Ethiopia’s case is that none of these land deals will bring about development of infrastructure or have any significant “spillover effect.” There will be few, if any, schools, hospitals, roads, bridges, rail lines or other lasting structures built as a result of these deals. The only legacy will be more misery and exploitation for the local people and environmental damage. As Ruth Meinzen-Dick, a senior research fellow at the International Food Policy Research Institute warned: “The majority of agricultural land in Africa is not titled. If these rights are not respected in these transactions, the livelihoods of millions of people will be put at risk.” In the end, in the petrodollar land swindle, Ethiopians will be stuck holding the bag. An empty bag!

[1] http://wwww.reliefweb.int/rw/RWFiles2009.nsf/FilesByRWDocUnidFilename/KHII-7SE4R4-full_report.pdf/$File/full_report.pdf Read See pp. 40, 41, 62, 78, 79, 80

The writer, Alemayehu G. Mariam, is a professor of political science at California State University, San Bernardino, and an attorney based in Los Angeles. For comments, he can be reached at almariam@gmail.com

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