Tomaso Ferrando, Guest Blogger
Tomaso Ferrando is a Ph.D. candidate in law, and currently a Visiting Fellow at the Institute for Global Law and Policy, Harvard Law School. This article is a condensed version of a chapter that appears in “Shifting Power: Critical perspectives on emerging economies,” published by the Transnational Institute (August 2014).
The BRICS countries’ relationships with other countries in the South are often said to be distinguishable from those of traditional Northern donors. In particular, it is often claimed that South-South development cooperation does not attach policy conditionalities, provides assistance based on a win-win paradigm, and places emphasis on how to ensure economic sustainability of the receiving country.[1] A closer look at the issue of investing in land abroad, and the use of investment agreements to secure those investments, suggests though that there is much less of a gulf between the practices of governments in North and South than we might like to think.
Data shows that BRICS countries’ investors (public, private, and mixed) play an increasingly crucial role in land investments (except Russia, which remains at the margin of the rush probably due to the amount of available land). Just as the global trend of increased interest and investment in land has led to a surge of land grabbing, BRICS investments have proved no different. There are zones of interest for each country, with a predilection toward neighboring countries (especially in the case of Brazil, South Africa and China) and certain areas of the African continent depending on geographical proximity or linguistic ties.
Grabbing control, not just land
This does not mean that these countries—or even their investors—are necessarily involved in seizing land. Land grabbing is essentially about grabbing control of land and its uses, increasing the power of investors in relation to sometimes vulnerable marginalised communities. BRICS investments in land are ultimately part of “an ongoing and accelerating change in the meaning and use of the land and its associated resources (like water) from small-scale, labor-intensive uses like peasant farming for household consumption and local markets, toward large-scale, capital-intensive, resource-depleting uses such as industrial monocultures, raw material extraction, and large-scale hydropower generation—integrated into a growing infrastructure that link extractive frontiers to metropolitan areas and foreign markets”[2]
Propelled by and supporting this global trend, Indian investors are particularly active in Indonesia, Malaysia and in the eastern part of Africa (especially Ethiopia[3] and Kenya), while Brazilian interests appear to be reduced and limited to Eastern Africa. South African capital is not only crossing the borders of Mozambique, Zambia,[4] and Swaziland, [5] but also of the Democratic Republic of Congo, [6] Angola, Benin, Congo and Ethiopia.[7] Finally, according to the available data, China is the most active investor, with more than five million hectares of land accessed in all the continents, with a stronger presence in Southern Asia,[8] Oceania and South America, rather than in Africa.[9] And Brazil and its investors are leading the pack when it comes to land grabbing.[10]
Delocalization of food and energy
Behind this land grab are the diplomatic and legislative strategies adopted by the governments of the BRICS. As global players in need of economic expansion, energy and food, the BRICS are consistently involved in reshaping political, legal, and trade agreements to facilitate investments.
China, India and South Africa have adopted legal reforms that favor the delocalization of food and energy production and support investments overseas. The Indian government, for example, provides support for conventional greenfield foreign direct investments, facilitation of public-private partnerships (PPPs), specific tariff reductions on agricultural goods imported to India[11] and preferred lines of credit (LoC) to partner governments and financial institutions through the Indian Export Import Bank (Exim Bank).[12] The intention of the government, clearly stated in its public announcements, is to avoid investing directly in land abroad to avoid being considered a neo-colonizer, but to obtain the same objective through its actions as a facilitator of foreign land deals, as long as “the private players show interest in this.”[13]
Meanwhile, Beijing’s two-fold “going out”[14] strategy has involved companies such as COFCO (China National Cereals, Oils and Foodstuffs Import and Export Company) acquiring concession rights in Latin America, South East Asia and Africa, to produce food and cash crops as well as Chinese capital aggressively taking over existing agricultural and livestock firms throughout the globe (included in the United States).
Brazil has followed a different policy of seeking to reduce access to Brazilian land by foreign investors, but has encouraged the Brazilian takeover of land overseas.
Laws behind the grab
It is noticeable that South-South investment contracts in land replicate the same content as North-South agreements. One of the most striking elements is their tendency to define land as void and immediately disposable, particularly in the case of Sub-Saharan Africa, along with their tendency to give unlimited access to water to the investors.
Article 3 of the agreement concluded between the India rose producer Karaturi Agro Products Plc. and the Government of Ethiopia, for example, affirms, “The issues addressed include the rights of the lessee to develop the land, build infrastructure, use water from rivers and ground water for irrigation, administer the land personally or through agency, use mechanization that the lessee deems fit, and terminate the contract with at least six months of prior notice” (emphasis added).[15] By controlling water, investors control much more than the land and its production.
These contracts are also backed increasingly by instruments of international law, in particular, the growing number of bilateral investment treaties (BITs) signed by BRICS countries with developing countries. BITs provide investors with broad protection in case of direct and indirect expropriation, changes of the environmental and labor legislations, and even modifications of the tax regime.
China, for example, has concluded BITs with Chad, Costa Rica, Cuba, Laos, Mali, Myanmar/Burma and Ethiopia and many others. Sixty percent of the BITs concluded by China between 2002 and 2007 were with developing countries, mainly African.[16]
Similarly, the intra-regional expansion of South African investments has convinced the Government to conclude BIT-type agreements with Angola, Cameroon, Democratic Republic of the Congo (DCR), Gabon, Guinea, Ethiopia, Mauritania, Namibia, Sudan, Tanzania, Zambia and Zimbabwe.
Different Actors, Similar Patterns
The dominant narrative about the BRICS countries’ approach to development is based upon G77 principles that affirm South-South cooperation, equality, solidarity, mutual development and complementarity.[17] Yet in reality, the proliferation of South-South bilateral investment treaties together with an extraordinary level of capital mobility has merely compounded the global surge of grabbing what used to be a public or common good (land, water, labor and fiscal resources) and progressively privatizing and commodifying it.
The reality of land grabbing by BRICS investors demonstrates that South-South relationships have to be studied more deeply and critically and that the notion of BRICS as an alternative has to be fragmented in its pieces and tested on the ground. In order to do so, we need to re-centre the study of international relations to look beyond states and put people at the heart. Land grabbing is not a matter of names and origins, but rather a result of the ongoing expansion of the capitalist system through what David Harvey calls “accumulation by dispossession.”[18]
[1] Mwase N. and Y. Yongzheng, Brics’ philosophies for development and their implications for LICs, IMF Working Paper, WP/12/74, March 2012.
[2] J. Franco, S. Borras Jr., et al., The global land grab: A Primer, Revised edition, TNI Agrarian Justice, Transnational Institute, Amsterdam (2013).
[3] According to the data collected by GRAIN, Indian corporations are involved in at least twelve agricultural projects in India, ranging between 3,000 to 311,000 hectares.
[4] Cf Mulenga N., Foreign Farmers Undermine Food Security in Zambia, November 1, 2012.
[5] GRAIN, Grain Land Grab Jan 2012, GRAIN Barcelona (2012).
[6] Cf. Commercial farming in the Congo not for the faint-hearted, October 26, 2012.
[7] Land Matrix 2012.
[8] Mainly in Indonesia, Laos, Philippines, Pakistan. GRAIN (2012).
[9] Chinese interests are significantly strong in Australia and New Zealand, where GRAIN (2012) has evidenced at least two agrobusiness projects, one financial and the acquisition of a local farming corporation. The largest agricultural Chinese public corporation, Beidahuang, had concluded a 320,000 ha investment agreement with the governor of the Rio Negro Region, in Argentina, which has been halted by judicial decree, and has also triggered a legislative proposal against foreign access to land.
[10] Interestingly enough, Brazil is both a target and source countries, as recently evidenced by Borras et al Saturnino M. Borras, Jennifer C. Franco & Chunyu Wang, “The Challenge of Global Governance of Land Grabbing: Changing International Agricultural Context and Competing Political Views and Strategies,” 10 Globalizations 161–179 (2013).
[11] According to Anand Seth, the deputy director general of the Federation of Indian Export Organisations Ethiopian farm products entering the Indian market are now taxed less than agricultural products originating from India. See R. Rowden, India’s role in the new global farmland grab, 29 Economics Research Foundation.
[12] The largest single line of credit approved by the Exim Bank so far has gone to Ethiopia — $640 million for a sugar project. See also S. Menon, “Bloodied pulses. Indian plantations bloom in Ethiopia at the cost of the livelihoods and homes of the tribals,” Business Standard, February 16, 2013, New Delhi, India.
[13] S. Pawar, “Daal not enough? Grow them abroad,” The Telegraph, Calcutta, 5 December 2010.
[14] A. C. Armony & Julia C. Strauss, “From Going Out (zou chuqu) to Arriving In (desembarco): Constructing a New Field of Inquiry in China–Latin America Interactions,” 209 The China Quarterly 1–17 (2012).
[15] Although Article 3.3 of the contract affirm that the lessee has the right to use “irrigation water from rivers or ground water respecting present and future environmental and water laws and regulations without any disturbance to the environment with prior permission from responsible federal and regional institutions”, it does not require the direct participation of local communities in the management and allocation of water, giving the state the full monopoly over this fundamental element of life.
[16] Malik M., 2010, South-South, Bilateral Investment Treaties: The same old story?, IV Annual Forum for Developing Country Investment Negotiators Background Papers New Delhi, October 27-29.
[17] South-South Cooperation principles.
[18] Harvey, D. 2003, The New Imperialism, Oxford University Press, Oxford.
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