Sunday, June 17, 2012


Saudi Arabia is just one of the Gulf petro-states. The other super-rich emirates were as panicked by the 2008 price spike as the Saudis. They face the same triple whammy of concerns. Demand for food is soaring as the arrival of millions of foreign workers sets them on course to double their populations by 2030. The emptying of water reserves is making food production at home impossible. And the emirs are losing faith in global markets to provide future food.

So, like the Saudi sheikhs, they have gone on a buying spree for farmland, calling on their Muslim brothers to open up their borders to Gulf land grabbers. One assessment at the end of 2009 found that Saudi Arabia and the other Gulf states were responsible for a third of the land purchased, leased, or under offer to foreigners by poorer countries.

The United Arab Emirates (UAE), a federation of seven Gulf emirates headed by Abu Dhabi and Dubai, took the lead. The Gulf’s largest private equity company, Dubai-based Abraaj Capital, said in 2008 that it had acquired 800,000 acres of “barren” farmland to grow rice and wheat in the Pakistani provinces of Punjab, Sindh, and Baluchistan. Others securing land in the Punjab, Pakistan’s breadbasket, included the Emirates Investment Group, a private group in Sharjah, and Abu Dhabi-based Al Qudra Holding. If even a fraction of this goes ahead, the implications could be grim for small Pakistani farmers, most of whom are sharecropping tenants of feudal families with vast landholdings who dominate Pakistani politics as well as the military. They will lose control of their plots of land and will probably not even find regular work as laborers on the new mechanized farms. UAE officials also said its companies had acquired 700,000 acres of Sudan, paying virtually nothing, on condition only that they invest. But, as in Pakistan, details of these deals remain sketchy. There have been lots of promises and pledges, but few statements detail specific projects, and there has been even less activity on the ground.

Other Gulf states have been almost as busy. The Kuwaiti government has followed the Saudis in doing deals to grow rice in Southeast Asian countries such as the Philippines, Burma, Laos and Cambodia. But the most dramatic dealing has been from the tiny island state of Qatar. The more I learned about Qatar’s exploits on the world land markets, the more extraordinary they appear. There is nowhere on the planet like Qatar, and its tentacles are everywhere.

Qatar is a small thumb-shaped peninsula of desert sticking out into the Persian Gulf from Saudi Arabia. It is smaller than Connecticut, with a population about the same as Little Rock, Ark. It was a poverty-stricken community of pearl divers until the development of oil reserves in the 1950s. Then came the discovery, just offshore, of vast reserves of natural gas. Today, Qatar is the world’s largest exporter of natural gas (8.8 trillion cubic feet a year, for anyone who is counting). It is superrich, even by Gulf standards. The 800,000 Qataris have both the highest average income and the largest per-capita carbon footprint on the planet. Its capital, Doha, is planning on being the next Dubai.

Qatar is an absolute monarchy. It has been dominated for more than a century by the Al Thani family, a Bedouin clan originally from Arabia. The current all-powerful emir, Sheikh Hamad bin Khalifa Al Thani, took power from his father in a palace coup in 1995. He has since secured his power by locking up a cousin, allegedly for using state funds to go on a billion-dollar shopping spree in the world’s art auction rooms. A curious amalgam of modernity and tradition, the emir funds the Al-Jazeera TV network, which helped fan the flames of the Arab Spring, and he has bought the right to hold the soccer World Cup in 2022.

Nobody knows quite where the state’s wealth ends and the emir’s wealth begins. For now, they amount to the same thing. And Qatar has been spending this money all over the world in a way that is surely unmatched for any small nation. In 2011, it was the world’s largest investor in overseas real estate. Much of that was spent in cities. In London alone, it spent billions buying the upscale department store Harrods and the vacated U.S. embassy in Grosvenor Square, while redeveloping the billion-dollar Chelsea Barracks site and building Europe’s tallest tower, the “shard of glass” near London Bridge. It also owns almost half of the Canary Wharf financial district.

But there has been no shortage of cash for farmland. The emir’s vehicle for farm grabs is a company called Hassad Food. It is the agricultural arm of the Qatar Investment Authority and thus effectively the property of the emir. It has done deals for land in Vietnam, Cambodia, Uzbekistan, Senegal, Kenya, Argentina, Ukraine and Turkey. It has set up partnerships with cattle ranches in Tajikistan and bought 370,000 acres of sheep ranches across three states of Australia. In Brazil, it is developing a 25-million-ton-a-year sugar scheme and a poultry project that will supply most of Qatar’s chicken and eggs. Hassad says it has secured 250,000 acres in the Philippines to grow rice. For a while, the Qatar government promised to build a billion-dollar freight port at Lamu Island on the coast of Kenya in return for 100,000 acres of irrigable land in the nearby Tana river delta — though that deal now seems to be off.

The pace has been astounding. It is hard to be sure, but it looks like the country has control of more land in other countries than at home. And while some projects, like many from the Saudis and the UAE, will probably never happen, the Al Thanis do seem bent on spending their treasure chest. There are plenty of takers for this Arab largesse. A constant stream of leaders from around the world has flown to the Gulf, offering land in return for investment. Indonesia’s agriculture minister Suswono went wooing Gulf states in 2010, offering 19 million acres of “sleeping land” for agribusiness investment. The veteran chief minister of Sarawak, the Borneo province of Malaysia, was looking for Gulf investment in his “Halal hub,” 190,000 acres of former rainforest being turned into farms for him by a Taiwanese company. Abdul Taib Mahmud, who is old enough to remember the Japanese landing in Borneo during the Second World War, was undaunted by fears of a new land invasion. He returned with a promise of a billion dollars from Perigon Advisory, an investment fund based in Bahrain.

For a while in 2009, Gulf investors showed signs of getting cold feet, as the credit crunch created the debt crisis that almost engulfed the region’s most visible totem of wealth, the desert megacity of Dubai. Some deals were quietly put on hold or dropped. Abu Dhabi’s Al Qudra Holding had promised in 2008 to acquire 1 million acres in a host of countries from Australia to Eritrea, Croatia to Thailand, and Ukraine to Pakistan. The first harvests, said CEO Mahmood Ibrahim Al Mahmood, would be shipped during 2011. But in 2011 there were no firm sightings of either land or harvest. Likewise, there was no subsequent trace of Qatar’s plan to buy the Pakistani government’s giant Kollurkar farm in Punjab, which farm leaders said threatened the homes of 25,000 people.

Eckart Woertz, director of economic studies at the Gulf Research Center, a privately funded think tank based in Dubai, said in June 2010: “Investment in land was the flavor of the month in 2008, but they are far away from building actual farm developments and overcoming political disagreements.” Agricultural expertise was often lacking. Financiers were sitting in their offices with wads of cash but not an engineer on their books, wondering what to do next.

But by late 2010, enthusiasm had revived with food prices. There were more grand declarations. This time, the Abu Dhabi Declaration on Food Security for Gulf Cooperation Council Countries took pride of place. And some investors, at least, were taking out their checkbooks again. But there were also signs of a new realism, with investors seeking out the expertise needed to turn their pipe dreams into reality.

They were turning to the Egyptians, for instance. In 2010, Gulf money was paying for Sudan to bring in Egyptians to revamp its large but dilapidated Gezira irrigation project — originally built by the British in the 1920s. Gezira grows cotton, sorghum, wheat, and groundnuts across 2.5 million acres of rich alluvial soil close to where the Blue and White Niles join. Weeks later, Khartoum and Islamabad were in discussions about shipping in Pakistanis to work the new farms.

And they were turning to Americans. The Pharos Financial Group, a Dubai-based hedge fund, is paying up to $100 million for an American pig farmer to start transforming part of Tanzania into a replica of the American Midwest. Bruce Rastetter’s plan is to take a 99-year lease on three huge refugee camps in southwest Tanzania that have housed escapees from the brutal conflicts in central Africa, including the Rwanda massacres of 1994. By late 2011, the Tanzanian government had emptied the first camp, the 60,000-acre Lugufu camp, which had been home to 100,000 people. Rastetter’s team, Agrisol, told me they would soon be growing corn and soy and raising poultry, initially for sale within Tanzania. Pharos promises worker training, community development funds, and a system to buy produce from outgrowers, but the heart of the scheme will be a vast expanse of commercialized, high-tech agriculture — Iowa in Tanzania.

Rastetter, who back home in the United States is known as a philanthropist and staunch Republican Party funder, told the local Des Moines Register that the project is “the farthest thing from a land grab that could exist.” But I would bet that if you are sitting in a camp in Tanzania, where you have lived your entire life, hearing reports of Arabs paying for fleets of John Deere tractors and truckloads of Monsanto seeds to come in from Iowa to take over your kitchen garden, you might not agree.

Whatever one feels about such projects, the Gulf governments were certainly right to be alarmed about the possible impact of rising food prices on their people. Perhaps more than they knew. By early 2011, the Middle East and North Africa were erupting with the Arab Spring. While the Western media concentrated on the politics of reform, many on the streets were protesting as much about bread prices as corruption. They were waving baguettes as they marched into Cairo’s Tahrir Square and Tunis’s November 7 Square (now renamed Mohamed Bouazizi Square, after the vegetable seller whose suicide sparked the revolution). In Yemen, they turned on their leaders with chapatis strapped to their temples.

The only Gulf state directly impacted by the uprising was Bahrain. But this was uncomfortably close for many of the region’s autocrats. Bahrain is connected by a causeway to Saudi Arabia. Governments reacted to shore up their popularity. Saudi Arabia increased food subsidies twice. Kuwait promised fourteen months of free food rations. Bahrain simply handed out cash as the people rioted against the ruling Al Khalifa royal family. The politics of food is now a serious issue for the princes of petroleum. And right now, cultivating foreign soil seems like their only salvation.

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