Global Foreign Direct Investment (FDI) inflows in 2014 declined 16 per cent to 1.2 trillion dollars, according to this year’s newly released World Investment Report from the United Nations Conference on Trade and Development (UNCTAD).

The UNCTAD report pointed to the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks as factors contributing to the drop in FDI. New investments were also offset by some large divestments.

However, FDI rose slightly to developing economies, which extended their lead in global inflows of investment. China is now the largest global recipient of FDI.

Released just ahead of the third international conference on financing for development in Addis Ababa in mid-July, the report concluded that reforming international investment governance is key to building an enabling environment for investment, maximising the chances of reaching ‘financing for development’ targets to be discussed at the conference.

West Asia maintained its downward trend in FDI in 2014 for the sixth consecutive year, decreasing by 4 per cent to 43 billion dollars. The report describes a succession of crises that have hit the region, including the global economic crisis and an eruption of political unrest leading to conflict in some countries, which have contributed to the continuous fall.

Elsewhere in South, East, and South-East Asia, the report was more positive. Inflows to South Asia rose to 41 billion dollars in 2014, primarily owing to good performance by India, while inflows to East Asia rose by 12 percent to 248 billion, and those to South-East Asia experienced a 5 percent increase, to 133 billion. China’s boost was driven by an increase in FDI to the services sector, while FDI fell in manufacturing, especially in industries that are sensitive to rising labour costs.

Developing economies as a group attracted 681 billion dollars worth of FDI and remain the leading region by share of global investment inflows. Among the top 10 FDI recipients in the world, half are developing economies: Brazil, China, Hong Kong (China), India and Singapore.

Developed economies, however, recorded a 28 per cent decline in inflows last year. This figure was greatly affected by the single mega divestment by Vodafone of its Verizon Wireless business in the United States. The Vodafone deal was indicative of a general trend in merger and acquisition activity which saw divestment deals rising to one out of every two mergers and acquisitions.

Edited by Kitty Stapp

Artisanal diamond miners at work in the alluvial diamond mines around the eastern town of Koidu, Sierra Leone. Credit: Tommy Trenchard/IPS

By Jomo Kwame Sundaram and Rudi von Arnim
ROME, Jun 23 2015 (IPS)

After the turn of the century, growth in sub-Saharan Africa (SSA) picked up again after a quarter century of near stagnation for most, mainly due to increased world demand for minerals and other natural resources.

The region became second only to East Asia in recovering from the global slowdown following the 2008-2009 financial crisis.Thanks to the failure of development over the preceding quarter century, SSA was the only region not to make any progress in reducing the population share in poverty, with the number of poor people actually rising significantly.

During the decade 2003-2013, growth was faster, averaging 2.6 percent per capita annually. The SSA growth acceleration of the past decade fueled hopes that growth on the continent had finally begun to accelerate and catch up.

Annual SSA per capita real GDP growth had averaged a respectable two percent in the 1960s, but had slowed down from the late 1970s. Over the next two decades, real per capita income for sub-Saharan countries shrank by about three quarters of a percentage point annually on average.

While SSA growth resumed in the last decade, reliance on natural resource extraction has compromised its developmental impact. Such economic activity, especially in mining, has few linkages to the rest of the national economy, thus limiting its growth and employment creation impacts as well.

As its economic performance has closely followed the vagaries of the global commodity price cycle, SSA growth in the last decade was largely driven by the minerals boom on the continent.

But the high commodity prices of the past decade have been reversed by the spreading global economic slowdown and the Saudi decision to drastically reduce oil prices.

However, natural resource extraction does not have the same potential to accelerate development as manufacturing. No country has successfully developed without substantially increasing manufacturing or high-end services. Sub-Saharan Africa has not done well on this score in recent decades.

While the manufacturing share of GDP for all developing countries has risen over 23 percent, it has fallen in SSA to 8 percent from 12 percent in the 1980s. Meanwhile, the primary commodities’ share of total SSA exports reached almost 90 percent in the past decade.

Premature and inappropriate trade liberalisation has damaged SSA’s limited export capacities. The region’s share of world merchandise exports fell from 5 percent in the 1950s to 1.8 percent during 2000-2010. Meanwhile, its share of world manufactured exports stands at a paltry one-fifth of one percentage point.

Trade liberalisation has also undermined the fiscal capacities of many governments in poor countries, with dire consequences for development and social progress.

Since many transactions in developing countries are informal, and hence untaxed, poor developing country governments have traditionally relied on trade tariffs to raise revenue.

Thus, trade liberalisation has reduced their ability to raise revenue, without providing alternate sources. As a consequence, the share of government spending in GDP has fallen from an average of around 16 percent during 1980-1999 to 13 percent during recent years.

Thus, neither trade nor financial liberalisation has helped accelerate economic growth in SSA. Growth requires investments, but investment as a share of SSA GDP has fallen in recent decades, to only 17 percent before the crisis.

External financial liberalisation from the 1980s was supposed to draw in foreign resources, but portfolio investments in SSA are negligible, and more crucially, ill-suited to facilitate sustainable growth.

Instead, there have been net outflows of capital from the world’s poorest region to international financial centres, including tax havens.

Appropriately targeted ‘greenfield’ foreign direct investment (FDI) has more potential to make a positive impact. However, Africa’s share of FDI to all developing economies has fallen from 21 percent in the 1970s to only 11 percent in recent years, or from 5 percent to 3 percent of global FDI.

To make matters worse, FDI in SSA overwhelmingly involves natural resource extraction, with few developmental spillovers from such investments.

According to World Bank estimates, the share of the SSA population living in extreme poverty rose from 50 percent in 1980 to 58 percent in 1998 before falling back to 50 percent in 2005.

Thanks to the failure of development over the preceding quarter century, SSA was the only region not to make any progress in reducing the population share in poverty, with the number of poor people actually rising significantly.

A decade ago, in 2005, the G8 summit at Gleneagles committed to increasing Official Development Assistance (ODA) by 50 billion dollars by 2010. The Gleneagles summit also promised to increase ODA to Africa by 25 billion dollars to 64 billion. Actual delivery fell short by 18 billion dollars, or by 72 percent!

In 2012 dollars, annual ODA to SSA hovered around 50 billion during 2006-2013, up from about 42 billion in 2005, but well short of what was promised. G8 aid to Africa falls well short of promised levels, even below the contributions from the small Nordic countries.

Not surprisingly, the recent G7 summit made no reference to the Gleneagles promises. Instead, it focused on addressing climate change, and it seems likely that climate finance conditionalities will undermine the principle of common, but differentiated responsibilities.

The struggle leading to the Conference of Parties in Paris will be to ensure that climate finance will be additional to the longstanding ODA promises, and will promote climate justice and development.

Edited by Kitty Stapp

Excerpt:

Customary land remains a vital source of food security, cash incomes and social wellbeing in Pacific Island countries, such as Vanuatu, where formal employment is only 20 percent. Credit: Catherine Wilson/IPS

By Catherine Wilson
PORT VILA, Oct 14 2014 (IPS)

Stemming widespread corruption in the leasing of customary land to investors is the aim of bold land reform, introduced this year in the Southwest Pacific Island state of Vanuatu, which puts the rights of traditional landowners above the discretionary powers of politicians.

Less than one hour from the capital, Port Vila, is the village of Mangaliliu, one of many across this sprawling nation of 82 islands and more than 247,000 people where livelihoods centre on agriculture and fishing.

Here, villagers are battling the loss of their traditional land due to a lease negotiated without their consent.

“We thought the tourism business or selling our land would give us work and employ a lot of our people, but now we realise we made a mistake." -- Mangaliliu’s Chief Mormor
“Somebody from another village leased one piece of our land to an investor. I tried to stop him. When he started bulldozing the land, I went with my people and took palm leaves, which we use as a sign of [something that is] taboo [forbidden]. We hung them all along the road and the case is now in court,” Mangaliliu’s Chief Mormor recounted.

Pristine coastlines and sea views on the country’s main island of Efate have attracted foreign investors interested in property and tourism development and now an estimated 56.5 percent of coastal land on the island has been leased for periods up to 75 years.

More than 80 percent of land in Vanuatu is customary, with ownership held by extended families, who are custodians for the next generation. Rights of use for farming or commercial enterprises are decided by group consensus, as are proposals on leasing to other parties. The importance of land to the culture, identity, food security and social wellbeing of Pacific Islanders is reflected in most national laws, which only allow the lease – not sale – of customary land.

Yet today with the penetration of the cash economy land has also become a source of windfalls to villagers and politicians alike.

“People have learned that if they sell [lease] one piece of land they can buy a car, satellite dish or speedboat,” Mormor said. “It can take many years to save this sort of money, so it is just like a miracle if you sell land.”

However under group custodianship conflict can quickly arise if, for example, “I have a brother who sells a piece of land and doesn’t ask permission of me or my sister, or my children, or my sister’s children,” he added.

In the past, the lands minister could personally decide on disputed leases. The World Bank’s Justice for the Poor programme reports that 21.4 percent of all new leases since the country’s independence in 1980 have been signed under this provision. Last year alleged improper land dealings accounted for almost two-thirds of lawsuits against the government.

Now, the ambitions of land reform by indigenous leader Ralph Regenvanu, who was appointed lands minister in 2013, have become a reality.

In December last year new laws were passed making it mandatory that all members of customary landowner groups give their prior informed consent to any leases over their land. Potential investors must apply to a land management planning committee for approval to conduct negotiations with custom owners. Two customary institutions, Nakamals and Custom Area Land Tribunals, will decide the outcome of disputes, rather than the courts.

According to Regenvanu, investor confidence will increase because now when “you get a lease you can be assured that it was gained lawfully.” But he also believes that the economic and social security which land provides to his people will be strengthened.

Steve Namali of the Vanuatu National Council of Chiefs in Port Vila commented that, while consultation on the reforms had not been conducted nationwide, he believed they would help address the fraudulence of land deals in the past.

With adult literacy in the province estimated at 27.6 percent, the greater thoroughness of the approval process should also improve local awareness of the ramifications of entering into land agreements. For example, reclaiming land on a lease expiry often requires compensation to the lessee for developments, even though many villagers do not have the financial means to reimburse an investor the value of a tourist resort or luxury home.

Local communities often “don’t understand what is going to happen in the long term” and that most likely “at the end of a lease, it [land] will never come back to traditional tenure,” Joel Simo of the Melanesian Indigenous Land Defence Alliance (MILDA), a regional civil society landowner solidarity network, said in Port Vila.

“There is now a process in place that has to be followed and it will stop individuals going and doing their own thing,” he said. “It has been a good change for Vanuatu, especially because of this land boom and people selling land left, right and centre.”

International investors from Australia, Europe and Asia have largely driven growth in the real estate market, along with the nation’s tax haven status. In 2012, foreign direct investment (FDI) amounted to 37.7 million dollars or 4.8 percent of GDP, but Mormor claims local people have seen few benefits.

“We thought the tourism business or selling our land would give us work and employ a lot of our people, but now we realise we made a mistake,” he said.

Despite average GDP growth of four percent over the past decade, with a high of 8.5 percent in 2006, an estimated 40 percent of people have incomes below the poverty line.

“I think people want development, but what type of development and in whose interests?” Simo queried. He believes protecting indigenous landownership makes sense when the traditional economy, which includes subsistence and smallholder agriculture, is the biggest employer in Melanesia.

In comparison, “many [formal sector] jobs available involve cheap labour and that only gets people into more poverty,” he said. Formal employment in Vanuatu is only 20 percent and the average local wage is 316 dollars per month. So, he continued, “If you don’t have a job, you fall back to the land,” which is the only safety net.

Mormor now wants to retain his land for community-driven projects, such as fish farming and coconut oil production. He is happy that the new laws will help protect the land for his children, but also admits the more thorough land registration and approval process, if he engages with development partners, will take much longer than in the past.

“I could be dead when these projects start,” he laughs.

While Vanuatu’s new laws are popular, it remains to be seen how well they work, and if they eliminate political cronyism.

Edited by Kanya D’Almeida

Construction of a railway running to the special development zone in the port of Mariel. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Apr 1 2014 (IPS)

A new law opening Cuba up to foreign investment and a shift in the country’s relations with the European Union are aimed at seeking outside support to overcome the chronic crisis plaguing the country since the early 1990s.

The new legislation could also facilitate the return – at least financial – of Cubans living abroad.

The new foreign investment law, which received unanimous approval in the legislature Saturday Mar. 29, invites foreign investors to operate in all sectors of Cuba’s planned economy, with the exception of four strategic areas: health, education, the media and the military.

The objective, according to the minister of foreign trade and investment, Rodrigo Malmierca, is to draw some 2.5 billion dollars a year in foreign direct investment.

The vice president of the Council of Ministers, Marino Murillo, said more FDI was needed in order for the economy to grow at an annual rate of around seven percent.

A 46-year-old schoolteacher who wished to remain anonymous told IPS that she hoped the economy would improve now. But she also said her late father, who worked in a sugar mill, used to tell her that before the 1959 revolution, wealthy foreigners would come to Cuba, set up companies, and take all the profits back to their own countries.

“But I understand that the law passed now is for the good of the country,” she added.

Like her, other people consulted by IPS said they hoped the opening to foreign investment would bring better living conditions for Cuba’s population of 11.2 million.

“Foreign investment is a necessary step for leaving the crisis behind as well as for the development of any nation,” said ecologist Isbel Díaz.

The new law, which will go into force 90 days after it is published in the Official Gazette, replaces a 1995 decree.

FDI in Cuba grew steadily from 1995 to 2002, to a peak of 403 joint ventures – a number that shrank to 218 in 2009.

Former economy minister José Luis Rodríguez wrote in an article that the sharp drop in investment was due to the expiration of contracts, breach of terms, and negative economic results from some of the ventures.

Other sources point to additional reasons like excessive red tape, non-payments and cases of corruption.

Spain heads the list of 15 countries doing business in Cuba, followed by Italy, Canada, Venezuela, France, the United Kingdom, the Netherlands, China, Mexico, Angola, Germany, Panama, Brazil, Chile and Russia, in that order.

Brazil’s participation will grow in the near future, mainly in the special development zone in Mariel, which is being built with financial support from South America’s giant.

That megaproject under construction 45 km west of Havana is to become a pillar of Cuban development due to the geographic location of the port, remodelled to equip the terminal to receive deeper-draft ships.

The project will also attract investment in biotechnology, the pharmaceutical industry, renewable energy, agribusiness, tourism and real estate.

At the same time, the start of negotiations of a new political accord with the European Union, which would normalise relations between Cuba and the European bloc’s 27 member countries, will put the bloc in a good position to do business with this Caribbean island nation as it opens up to foreign investment, analysts told IPS.

The talks are set to begin in April, and analysts say the likelihood of an agreement could be fuelled by the new law on investment.

European representatives have indicated that the aim of the negotiations is to reach an agreement that supports “reform and modernisation” in Cuba, while promoting human rights.

“Europe already has strategic and economic interests on the island, cultivated for decades, and linked with the presence of its companies and networks of influence in Cuba,” Arturo López-Levy, a Cuban political scientist living in the United States, told IPS via email.

But López-Levy, a lecturer at the University of Denver, Colorado, said Europe had a limited window of time to jockey for position in Cuba “before the onslaught of business from the United States.”

In his view, the reform of the Cuban economy, which began to be implemented in 2008, has begun to “whet the appetites” of members of the U.S. business community and of Cubans living in the United States, despite Washington’s 52-year-old trade embargo against Cuba.

The embargo keeps companies in the United States from competing for space in the Cuban market, and puts the EU in a “privileged position,” said López-Levy.

He said the opening to foreign investment makes it more likely that “the United States will replace the current policy of self-isolation with one more in line with its democratic values and economic and strategic interests.”

In 2013, Cuba’s GDP grew only 2.7 percent, below the target of 3.6 percent, while it grew just 3.1 percent in 2012. For 2014, the forecast is for 2.2 percent growth.

Foreign investment in Cuba would be focused on the diversification and expansion of export markets, access to state-of-the-art technologies, and import substitution, with a priority on food.

To encourage the influx of foreign capital, the new law offers investors significant facilities and tax exemptions.

It also guarantees that property will not be expropriated “except for reasons of social interest or public utility previously declared by the Council of Ministers and with due compensation,” said the president of the parliamentary commission on constitutional and legal affairs, José Luis Toledo.

The new law will allow companies funded entirely by foreign capital in cases where the complexity or importance of the endeavour requires it, especially in the development of industrial infrastructure. The 1995 law also permitted this, although in practice the state maintained control of a 51 percent share in all joint ventures.

One of the touchiest aspects is employment, because foreign-owned companies would be required to hire local labour through a state agency, which would receive the wages in convertible hard currency and pay workers in the weakened peso.

“It is worrisome; investors would find cheap labour in Cuba,” said Díaz, the environmentalist.

Analysts say that from the definition of foreign investor, it can be inferred that Cubans living abroad could invest here.

“Many Cubans who live in the United States and have enough money are interested in investing in the fatherland,” Cuban nurse José Enrique Romero, who has lived in the United States for 35 years, commented to IPS. “But independently of the limitations of the embargo, they are worried about changes that will affect them.”

* With additional reporting by Ivet González.

Children in Luanda. Angola is expected to graduate from the ranks of the LDCs by 2015. Credit: Louise Redvers/IPS

By Thalif Deen
UNITED NATIONS, Jul 31 2013 (IPS)

The number of “least developed countries” (LDCs), which rose from the original 24 back in 1971 to the current 49, is beginning to shrink – haltingly.

So far, three countries – Botswana, Cape Verde and the Maldives – have “graduated” from LDCs to the status of developing countries."The key issue of a widening inequality gap and redistribution of resources remains a development challenge." -- Dr. Arjun Karki of LDC Watch

And as economies improve, at least six more countries – Tuvalu, Vanuatu, Kiribati, Angola, Samoa and Equatorial Guinea – are on the verge of leaving the ranks of LDCs by 2015.

But some of them have been reluctant to graduate – and sought postponements – since LDC status provides several benefits, including preferential tariffs on exports and increased development aid.

Still, the growing list of potential “graduates” comes in the midst of a new U.N. report that says inflows of foreign direct investment (FDI) to LDCs grew by 20 percent last year, registering a record 26 billion dollars.

The strong gains were led by Cambodia, as well as five African countries: the Democratic Republic of Congo (DRC), Liberia, Mauritania, Mozambique and Uganda, all of them LDCs.

The recently-released World Investment Report 2013, authored by the Geneva-based U.N. Conference on Trade and Development (UNCTAD), says growth was led by strong gains in Cambodia (where inflows were up 73 percent), DRC (96 percent), Liberia (167 percent), Mauritania (105 percent), Mozambique (96 percent), and Uganda (93 percent).

Still, 20 LDCs reported declines in FDI, and the trend was particularly pronounced in Angola, Burundi, Mali and the Solomon Islands.

Described as the poorest of the world’s poor, LDCs are mostly characterised by extreme poverty and economic structural weaknesses.

According to the United Nations, these have been often compounded by geophysical handicaps, limited capacity for growth and development and vulnerability to external shocks.

The most recent addition to the list of 49 LDCs is the new nation state of South Sudan, which joined the United Nations as its 193rd member in July 2011.

Asked if the FDI increase in LDCs is the beginning of a new trend or just a flash in the pan, Dr. Arjun Karki, international coordinator for LDC Watch, a global civil society alliance solely focused on developmental issues and concerns of the LDCs, told IPS, “The scenario is not crystal clear.”

Given the fall in FDI inflows to developed countries, the LDCs are now on the FDI radar, he added.

“If you observe the trend, it’s the resource-rich LDCs, such as the DRC, Liberia, Mauritania, Mozambique, and Uganda, that are receiving FDI inflows,” he pointed out.

But investments are reported to be highest in the extractive sector, he noted.

“From the development perspective, this trend is not very encouraging as this reinforces the commodity-led growth in LDCs which is not sustainable,” Dr Karki said.

The U.N. Committee for Development Policy (CDP) usually determines “eligibility” for LDC status – based on several factors, including population, national income and other economic indicators – but the ultimate decision rests with the countries themselves.
Zimbabwe, for example, has refused to join the LDC group despite being judged eligible by CDP.

Secretary-General Ban Ki-moon says the increase in FDI comes at “an important moment” when the international community is making a final push to achieve the Millennium Development Goals (MDGs) by the target date of 2015.

One of the primary objectives of MDGs is to reduce and eliminate extreme poverty and hunger, two of the major problems facing most LDCs.

At the same time, he said, the United Nations is working to forge a vision for the post-2015 development agenda.

Credible and objective information on FDI can contribute to success in these twin endeavours, Ban added.

Dr. Karki told IPS the new Istanbul Programme of Action for LDCs for the Decade 2011-2020 is a slight shift from the commodity-oriented growth towards building productive capacity of LDCs in order to achieve structural economic transformation of LDCs.

Therefore, FDI inflows to LDCs would be welcome if they are targeted at the manufacturing sector, infrastructure and basic services sector such as health, water and sanitation, electricity and communications.

The key problem with FDI inflows targeting the extractive sector is that the benefits fail to trickle down, with only the multinational and transnational corporations and the recipient country’s elites minting money at the expense of the poor, marginalised and vulnerable communities, he pointed out.

“The key issue of widening inequality gap and redistribution of resources remains a development challenge,” he said. “This fact was blatant during my recent visit to Liberia and Sierra Leone – two extremely resource-rich LDCs but unfortunately, with the poorest populations.

“Given such a sad irony, our civil society partners were of the opinion that all the riches should remain in the soil/ground as they fail to ensure the right to sustainable development of the peoples anyway.”

The negative growth – particularly in Angola, Burundi and Mali – could be attributed to the political instability in these LDCs, which is not a good breeding ground for FDI.

“Having said this, it is also interesting to note that FDI inflows are high in both authoritarian regimes as well as in vulnerable governments as is the case in Africa and Asia,” Dr. Karki noted.

He said the other reason for FDI decline could be the evolving role of development-oriented governments in LDCs that are attempting to safeguard national interests and rights of peoples over profit and plunder.

“If this is truly the case, then LDC governments are in the right direction towards genuinely uplifting their populations out of the structural causes of poverty, deprivation and injustices,” he said.

The issue of sovereignty is critical in terms of respecting and complying with country systems. Otherwise, it has been proven that FDI is more of a bane than a boon for sustainable development, Dr Karki concluded.

Displaced families in this relocation site, 45 kilometres from Phnom Penh, have no access to schools, water, food or health clinics. Credit: Michelle Tolson/IPS

By Michelle Tolson
PHNOM PENH, Feb 14 2013 (IPS)

Nean Narin, a humble man and father of three children, says his family is going hungry. Narin lives in the village of Boeung Kak, situated on the edge of Cambodia’s capital, Phnom Penh. For years, he and other villagers relied on the Boeung Kak Lake for fish and plants, which they would eat and sell.

But in mid-2008, construction workers began pumping sand into the lake “in preparation for the development of a 133-hectare commercial and housing project” sponsored by Shukaku, Inc. — a Cambodian firm owned by a Senator of the ruling Cambodian People’s Party – and leased to the Chinese-owned Erdos Hong Jun Investment Co., Ltd.

Over the next four years, the project would displace over 3,000 families.

Narin and his neighbour Tep Vanny, along with a many others, refused to leave and now live a hand-to-mouth existence, stripped of a steady livelihood.

Vanny’s parents left Boeung Kak and moved to the rural Kampong Speu province, located about 48 kilometres from Phnom Penh.

But a sugar plantation tycoon has since claimed that land, and the family now faces eviction for the second time, she told IPS. All the fruit trees Vanny’s parents relied on for food have been cut down, and no compensation offered.

What was once a modest life has now become a daily struggle for survival as a result of a land buying spree in this Southeast Asian country of 14 million people, which experts say began during the 2007-2008 financial and food crisis.

"Land is life; land is dignity and without land farmers become workers for life, working as slaves for plantation owners.”
In Cambodia, land is equivalent to life: according to Germany’s federal ministry for economic cooperation and development (GTZ) over 80 percent of the population are subsistence farmers.

One of the world’s least developed countries, Cambodia seems to have no place left to go but up: over 68 percent of its people live on less than two dollars a day and 26 percent suffer from hunger on a daily basis. But the wave of land acquisitions, experienced first-hand by thousands of people like Niren and Vanny, suggests that the situation could soon get much worse.

FDI feeds landlessness

For the last two decades a wave of foreign direct investment (FDI) has had lopsided results here.

The market-driven economy – launched in 1989 and opened to foreign investors in 1993 – fuelled a rapid increase in FDI, from practically nothing in 1990 to 800 million dollars in 2008, according to the Food and Agriculture Organisation of the United Nations.

Asian countries were the largest investors from 2000 to 2010: China topped the list with 47.6 percent of FDI, making South Korea — with 18.8 percent — the second-largest investor.

While investments initially went straight into sectors like tourism (53 percent), infrastructure (21 percent) and the garments industry (20 percent), the past half-decade has seen a steady rise in land investments.

Various local and international experts attribute this spike to the global food and financial crisis of 2007 to 2008 when farmland became a valuable asset to wealthier countries outsourcing agricultural production to increase their food security, and financial speculators cashing in on land investments.

But this pattern could have catastrophic implications for millions of peasants here – already land tenure has been shrinking and 20 percent of agricultural families in Cambodia are landless.

Rural populations holding tenuous land titles are left without recourse when international players contract land from the government in lengthy leases running from 70 to 99 years.

Various Cambodian rights groups have pointed out that small farmers find their land titles invalidated and are left with paltry compensation, if any at all.

Today, land is being gobbled up at the rate of two percent annually, according to the Coalition for Agrarian Reform and Rural Development (ANGOC).

The Cambodian League for the Defence and Promotion of Human Rights (LICADHO), a local NGO, recently reported that this represents a total of over two million hectares. By 2012, roughly 22 percent of Cambodia’s land had been “leased” to private firms, the group found.

Though little is known about the international players behind the Economic Land Concessions (ELC) – a clause in Cambodia’s 2001 Land Law that gives the government the green light to lease up to 25,000 hectares for nearly a century at a time — Parliament Member Mu Sochua told IPS the Prime Minister’s signature can be found on all of the land deals.

But there is no way to prosecute him, the lawmaker said.

Between 2003 and 2008, land concessions in Cambodia affected 250,000 people, according to LICADHO – though very little information about these deals is available in the public domain.

Land investments are also characterised by a lack of data.  The last report released by the ministry of agriculture, forestry and fisheries was in 2006.  In that year, 30 land concessions were granted to foreign companies: about half were Chinese while the rest were Vietnamese, Thai, South Korean and from the U.S.

Now, ANGOC is calling attention to what they see as a looming food security crisis arising from rampant land acquisition by foreign interests.

This group of regional NGOs reports that Southeast Asia—“home to 75 percent of the world’s farming households, 80 percent of which are small-scale farmers and producers”—has now become the second most popular region for land grabs, after Africa.

Usually state-approved, the concessions are marked by an utter lack of consultation with peasants and local landowners.

As Sochua pointed out, “Land is life; land is dignity and without land farmers become workers for life, working as slaves for plantation owners.” She recently visited a community close to the border with Thailand, which had lost 4,000 hectares of paddy land to a 2011 government “concession”.

The developer is now renting the farmers’ land back to them at 100 dollars per year. Already poor, the villagers are now heavily in debt with precious few options for employment – as the daily wage for agricultural labour ranges from 2.5 to five dollars.

Given that foreign investment surpassed foreign aid in the past decade, international donors have less power to intercede in human rights violations, according to GTZ’s report.

The World Bank, for instance, froze its funding over the contentious case of the displacement of informal settlers at Boeung Kak Lake in 2011 but this not been able to halt the Chinese-backed project.

Those protesting the eviction are still under threat. The “BK 13”, a group to which Vanny belongs, were arrested and subsequently released. Others continue to languish in prison for speaking out about land rights.

Not only is FDI displacing farmers but the beneficial trade ranking the European Union (EU) afforded Cambodia as an LDC — known as the Everything But Arms (EBA) agreement—has also taken a toll.  The scheme allows duty-free exports of agricultural products to the EU and has sparked an upsurge of land grabs for sugar cane plantations.

These acquisitions have displaced over 1,500 families in the Koh Kong, Kampong Speu and Oddar Meanchey provinces.

Advocates such as ANGOC believe non-violent grassroots movements are needed to change land policies.

The stirrings of collective action surfaced alongside the high-level summit of the Association of Southeast Asian Nations (ASEAN) held here last November, when various activist groups came together for a grassroots assembly to protest human rights violations in Cambodia. Concern over land grabs topped a long list of grievances outlined by civil society.

Vanny, who was closely involved in the people’s summit and has been selected by Vital Voices to receive the prestigious Global Leadership Award this year, sees no future without a long struggle.

“I want people to know that we need to fight for our rights,” she told IPS. “It might not benefit us now, but it will benefit our kids.”

(END)

Chilean President Sebastián Piñera flanked by Herman Van Rompuy (left) and José Durão Barroso. Credit: Marianela Jarroud/IPS

By Marianela Jarroud
SANTIAGO, Jan 29 2013 (IPS)

The nations of Latin America and the Caribbean strengthened their position with respect to Europe at the CELAC-EU summit held this weekend in the Chilean capital, reaching agreements that protect their natural resources from foreign investors and securing a joint condemnation of the United States’ trade embargo against Cuba.

The 33 heads of state and high representatives of the Community of Latin American and Caribbean States (CELAC) managed significant amendments in the Declaration of Santiago signed on Sunday Jan. 27 with the 27 member states of the European Union, changing in their favour the key articles that establish the legal framework for foreign investment in the region.

“Legal certainty is the leading issue of contention with the EU, not because the countries of the region are unwilling to provide it, but because each country has its own view and is adopting its own process,” Bolivian Communications Minister Amanda Dávila told IPS.

“The countries of the Bolivarian Alliance for the Peoples of Our America (ALBA) expressed their opinion on sovereignty and voiced their legitimate right to adopt their own policies and to disagree with positions and commitments regarding positions originating in other blocs,” she added.

“We emphasise the importance of working together to promote investments that support the sustainable and sound use of natural resources, environmental care, and economic and social development, and to maintain a favourable investment climate, with legal certainty and respect of national and international law,” according to the revised clause in the declaration.

Dávila said that the final declaration of the CELAC-EU summit is “a huge step forward, an important achievement”, because progress was made on “establishing sovereignty, as the Latin American region has done when it comes to the Malvinas (Falkland) Islands, Cuba and the maritime demand.”

Dávila was referring to the demands made by ALBA — made up of Antigua and Barbuda, Bolivia, Cuba, Dominica, Ecuador, Nicaragua, St. Vincent and the Grenadines and Venezuela — for the inclusion (in the Santiago Declaration) of Argentina’s sovereignty claim over the disputed South Atlantic islands, the condemnation of the U.S. blockade against Cuba, and Bolivia’s request for a sovereign outlet to the Pacific Ocean.

The Santiago Declaration further established the “importance of providing legal certainty for economic operators” and made a commitment to “maintain a supportive business environment for investors (…) while recognising the sovereign right of states to regulate.”

Dávila said investors must act accordingly, recognising “the right of countries to regulate in order to meet their national policy objectives in accordance with their international commitments and obligations”, as stated in the declaration.

Concurring with her, the director general of the United Nations Food and Agriculture Organisation (FAO), Graziano da Silva, told IPS that the world is used “to treating investment as a private matter, subject to the will of investors, assuming that the country receiving the capital has to yield at all times to the will of the other party.

“But that’s changed,” he said. “A broad agreement must be reached on the issue” in order to ensure that “investments are made responsibly and are, consequently, honoured,” he added.

Trade between CELAC and EU countries grew by an annual average of 13 percent between 2002 and 2011, according to official figures, reaching a total of 276 billion dollars in 2011. In 2012, trade figures were up by 23.9 percent compared with 2011.

As for capital movements between the two regions, the International Monetary Fund (IMF) reported that foreign direct investment (FDI) by the EU in CELAC countries amounted to 613 billion dollars in 2011, representing 47 percent of FDI in the CELAC region, and five percent of the EU’s global investments.

Speaking at a press conference, the president of the European Council, Herman Van Rompuy, recalled that the EU remains the largest foreign investor in Latin America and the Caribbean.

In spite of the achievement of ALBA representatives led by Venezuela, the final text of the Santiago Declaration also includes a commitment to “avoid protectionism in all its forms” in order to “favour an open and non-discriminatory, rules-based multilateral trade system”.

Van Rompuy said the EU “anxiously” awaits a trade agreement with the Southern Common Market (Mercosur), made up of Argentina, Brazil, Paraguay (membership currently suspended), Uruguay and Venezuela.

These negotiations have been stalled for years, and their reactivation appears a far-off prospect, given the protectionist measures imposed by Argentina and Brazil as a defence against the economic and financial crisis in the industrialised North, especially in the EU.

However, Van Rompuy said he was optimistic that the bilateral talks would resume soon. Chancellor Angela Merkel of Germany also called for progress on the negotiations and for an end to protectionism.

The EU announced free trade agreements with Peru and Colombia, and an association agreement between the EU and Central America also took shape at the Santiago Summit.

FAO director da Silva stressed that an EU-Mercosur agreement would allow for further integration of the regions’ economies, both in the agricultural sector and in services and industry. He also expressed his desire to “advance and overcome the barriers that prevent this offer from becoming a real and effective agreement”.

The 14-page Santiago Declaration contains over 40 points of agreement, including the commitment of both blocs to multilateralism, respect for indigenous peoples, gender equality and human rights, and rejection of terrorism in all its forms.

The leaders of the two regions undertook to strive for “sustainable development in its three dimensions: economic, social and environmental”, and expressed their concern about the economic crisis, as “recovery remains very slow”.

“We firmly reject all coercive measures of unilateral character with extraterritorial effect that are contrary to international law and the commonly accepted rules of free trade,” the declaration says.

The signatories of the Santiago summit’s final declaration observe that this kind of practice represents a serious threat to multilateralism.

“In this context, and with reference to UNGA (United Nations General Assembly) resolution A/RES/67/4, we reaffirm our well-known positions on the application of the extra-territorial provisions of the Helms-Burton Act,” they state, referring to the U.S. law that exacerbated its embargo against Cuba, the country that will exercise the CELAC’s next temporary presidency.

Guillermo Holzmann, a Chilean political scientist, said that although CELAC did not come to the summit with one voice, as countries within the region have divergent positions, it did constitute a single organisation that today has “a significant opportunity for consolidation”.

In that sense, he told IPS that the region can rightly flex its muscles, because it is part of the solution to the European economic crisis, but no longer as part of “a single relationship of dependency”.

(END)

China’s new Dragon Mart complex in Mexico replicates the huge centre established by China in Dubai in 2004. Credit: Ahmed Rabea/CC-BY-SA-2.0

By Emilio Godoy
MEXICO CITY, Jan 22 2013 (IPS)

“We are completely ‘clueless’ when it comes to China.” This statement by Enrique Dussel, director of the Centre for China-Mexico Studies of the National Autonomous University of Mexico, perfectly describes the currently stale state of relations between the two countries.

“We have no policy to speak of for China. There’s no strategy that adequately reflects China’s global importance and does justice to our second leading trade partner. We seem to have hit an all time low. I don’t think economic and trade relations can get any worse,” Dussel said in an interview with IPS.

China is Mexico’s second biggest trading partner, behind the United States, yet no efforts have been made by the Latin American country to modify its highly negative bilateral trade balance with the Asian giant or to attract Chinese foreign direct investment (FDI), which is marginal.

This distancing of the two countries is best illustrated by the controversy over the construction of the Dragon Mart retail complex, planned by local and Chinese investors for the area surrounding the southeastern town of Puerto Morelos, some 1,634 kilometres south of Mexico City.

The mega-project, announced in 2011, will cover 192 hectares in total, including storefronts, storage facilities, and luxury residences, with an estimated investment of more than 1.5 billion dollars and some 6,000 new direct and indirect jobs, according to Mexican press sources and the official Chinese newspaper, ‘China Daily’.

This sprawling infrastructure is set to be the trade platform from which Chinese-made goods will be supplied to all of Latin America, and it will create a Chinese enclave in a major tourist hotspot, as it will be located just 34 kilometres from the resort city of Cancún, in the Mexican state of Quintana Roo.

The project has raised concerns in Mexico, Latin America’s second largest economy, where both the leading business associations as well as academics and environmentalists have expressed their objections, fearing that the shopping complex will foster smuggling, unfair competition and the sale of counterfeit products, in addition to causing the area environmental harm.

Ricardo Samaniego, director of the Applied Economics and Public Policy Centre, strongly opposes the project, telling IPS that construction of “Dragon Mart must be put off until its environmental and socioeconomic costs are assessed.

“The project is part of a strategy deployed by China to secure energy and natural resources. Chinese involvement in commercial projects is subsidised by the government,” he argued.

In his opinion, “increasing worldwide complaints against Chinese trade practices and the project’s negative economic externalities” compound the situation.

“Mexico must hold out for a more reciprocal deal before it makes certain concessions. And this has to do with the country’s general policy towards China,” the expert noted.

The Dragon Mart complex projected for the leading port of Quintana Roo replicates and expands the huge Dragon Mart established by China in 2004 in the United Arab Emirates (UAE) city of Dubai.

At the same time, criticisms of the project feed China’s wariness to invest in Mexico and explain why economic and trade relations between both countries are tense, despite maintaining full diplomatic ties since 1972.

Mexico has a high trade deficit with China, having purchased 52 billion dollars worth of Chinese goods in 2011, while selling products to that country for a value of only two billion dollars.

China’s FDI in Mexico is equally discouraging, although the two countries give different figures for this indicator. Mexico’s Finance Secretariat puts the figure at 157 million dollars in 2011, while Beijing says it was almost four times that much, roughly 614 million dollars.

Both governments agree that Mexican investments in China that year were barely above 100 million dollars.

China’s meagre investment in Mexico is underscored by the fact that the United States’ FDI in the region was upwards of eight billion dollars that year and 15 billion dollars the year before, according to the United Nation’s Economic Commission for Latin America and the Caribbean (ECLAC).

A group of 100 academics, politicians and business operators, under Dussel’s coordination, have drafted a Strategic Agenda for Mexico-China Relations, in which they highlight the absence of a “short, medium and long term (plan) for China, which affects economic and trade relations.”

The proposed agenda was presented to Mexican President Enrique Peña Nieto last December, immediately after his inauguration on the first of that month, and it calls on the government to prioritise a strategy with Beijing, given “the great involvement of the Chinese public sector in trade and investment.”

It also cautions: “If political and strategic talks between the two do not improve, it will be hard to solve and negotiate other pending binational issues.”

The proposal, which examines economic, trade, environmental, educational and cultural aspects, notes that China does not invest in Mexico because of the country’s widespread insecurity, the local government’s failure to grant trade benefits, and the lack of support for joint venture investments with Chinese capital.

The friction caused by the Dragon Mart project in which Chinamex Middle East Investment & Trade Promotion Centre – an overseas promotion effort of China’s Ministry of Commerce – is involved, fuels an already tense relationship.

The experts consulted described the two countries’ relations as “dysfunctional” and observed that the problem is more than economic.

In October 2012, the Felipe Calderón administration (2006-2012) filed a complaint against China with the World Trade Organisation (WTO), accusing it of granting subsidies prohibited by that body to textile and garment industries, a sector in which China and Mexico compete for the United States market.

In the first week of January, one of Peña Nieto’s first measures as president was to postpone a 25-20 percent tariff reduction for Chinese garments and footwear until 2014, in response to a demand from local textile and shoe manufacturers.

The poor relations between these two nations have had numerous repercussions, including Mexico’s failed bid for the International Monetary Fund’s head position in 2011, as China turned its back on Mexican candidate Agustín Carstens.

“Mexicans disagree on the stance to take, as some sectors call for a strengthening of relations while others want nothing to do with China,” Dussel said.

In November, before taking office, Peña Nieto met with a delegation of one of China’s leading state banks, the Industrial and Commerce Bank of China (ICBC). But his administration has not given any hints as to how it will address its bilateral ties with China.

The Strategic Agenda for 2013 recommends creating a 50-million-dollar credit programme to promote exports to China, and establishing a Chinese Investment Attraction Fund, with 40 million dollars a year, to bring in capital from Beijing.

“China’s trade practices have not been very transparent. Mexico has to pay close attention to these practices. In the case of the Dragon Mart project, the government’s position was remote,” Samaniego said.

Dragon Mart has generated a current of negative opinion and Beijing can read and, better still, interpret the signs, the experts said.