Pakistan: Now or Never?

Opposition mounts to Pakistani farmland sale plan

Pakistan is pushing ahead with a plan to sell or lease agriculture land to foreign investors even as opposition grows at home.  A Saudi delegation is due in the country at the end of Ramadan this month for further talks on a plan to lease an area of land more than twice the size of Hong Kong, a Pakistani official told Reuters this month.

The Saudis are looking to boost their food security and Pakistan will presumably will reap monetary benefits in return. But what about Pakistan’s own food security in the longer term, All Things Pakistan asked in a recent post.

A stampede  for food in Karachi on Monday, although not related, underscored Pakistan’s own vulnerabilities and the plight of some of the nation’s desperately poor. Eighteen women and children died iin the stampede that erupted when a local businessman was handing out wheat flour among hundreds of poor women gathered in a narrow lane.

Those were the destitute, but giving away rich land to foreigners to cultivate and take the produce to their homeland will ultimately hit the ordinary Pakistani, the small farmer and those who indirectly depend on farming for their livelihood, critics are warning.

Robert Schubert in a piece for Food and Water Watch says it has been recognised in other parts of the world that such a “land grab”  harms local communities by dislodging smallholder farmers, aggravating rural poverty and food insecurity. Many of the land purchases comprise tens of thousands of acres which are then turned into single-crop farms – and these dwarf the small-scale farms common in the developing world, where nearly nine out of 10 farms (85 per cent) are less than five acres.

Pakistan’s farmland sales: a fatal folly?

Any student of history will tell you that a recurring feature of 20th century revolutions and civil wars was conflict over land ownership, driven by the resentment of the rural poor against the concentration of agricultural wealth in the hands of the elite. (Cuba and Vietnam, where Fidel Castro and Ho Chi Minh picked up support by championing farm reform, are good places to start.)

So Pakistan’s plans to sell farmland to rich Gulf investors deserve serious attention, even if land ownership does not have the same ability to grab headlines as its nuclear weapons.

Waqar Ahmed Khan, the Federal Minister of Investment, said last month Pakistan was offering one million acres of farmland for lease or sale to countries seeking to develop food supplies, and was holding talks with Saudi Arabia, the United Arab Emirates, Bahrain and other Arab states. He said all land up for sale or lease was currently unused and promised to hire a security force of 100,000 men, funded by foreign aid, to protect their investments.

His comments prompted a column in U.S. website The National Interest, which argued that the farmland sales would serve as a recruitment tool for Islamist militants who have already picked up support by championing the cause of Pakistan’s rural poor against the feudal elite which dominates the country.

The devil, as usual, will be in the details, but the following obvious questions spring to mind.

What does it mean for Pakistan’s fractured society?

In an article in the Huffington Post, Eric Margolis became the latest to argue that the battle against Islamist militants in Pakistan’s north-west is in danger of morphing into a much wider conflict – ”a national revolution in Pakistan against the western-backed feudal oligarchy that has ruled it since 1947.”  If correct, then any perception that the rich were benefitting from farmland sales at the expense of the poor would only stoke this anger further. 

What price Saudi oil bill deferrals for Pakistan?

A report in the Financial Times that Saudi Arabia has agreed in principle to defer payments for crude oil sales to Pakistan worth $5.9 billion has raised speculation about what it is looking for in return.

The Daily Times suggests that the Saudis are buying political stability in Pakistan, which may include throwing a lifeline to President Pervez Musharraf.  “Apparently, the immediate impact will be on PML-N chief Nawaz Sharif’s politics of confrontation with Musharraf, which will have to be diluted significantly in line with ground realities,” it says. ”The Saudis, like the Americans, want a stable transition to civilian rule and no confrontation between the politicians and the military, including Musharraf.”

The Saudis have no interest in seeing Pakistan descend into chaos, not least because this would further strengthen al Qaeda which has set its own sights on the kingdom’s rulers. It may also see Sunni-dominated Pakistan as a potential counterweight to Shi’ite Iran. So it would make sense for it to buy stability in Pakistan.

At the same time, Saudi Arabia is looking to use Pakistani farmland to grow grains  to protect itself from food shortages and rising prices, as indeed are other Gulf states.  So there may be an element of oil-for-food as well as oil-for-stability in the deal.

The  Daily Times adds a note of warning however in a subsequent editorial. It says Islamabad must also look to alternative sources of energy so that the Saudi bailout does not become “politically suspect”.

One to watch, with no doubt far more to come before this deal is fully played out.

Should Pakistan grow food for the Gulf?

This is an idea that looks crazy at first glance — Pakistan, struggling with its own food shortages and rising prices, rents out its farmland to grow grains for the rich Gulf states instead. 

But the idea appears to be gaining momentum. Saudi Arabia is holding talks with officials in Pakistan, among other countries, to set up projects to grow wheat and other grains to protect itself from crises in world food supplies. Dubai-based private equity firm Abraaj Capital has already said it is looking at investing in agriculture in Pakistan  and other Gulf countries are also showing an interest.

So is this good or bad news for Pakistan?

U.S. News & World Report says there may be ”potential for large and enduring benefits on both sides. The reported sellers of under-developed farmland, Pakistan and Sudan, for example, are poor and lack the resources to make their own land productive,” it says. “Foreign investment is meant to help the investor, but in these cases it might also help the host countries by improving roads and irrigation and, of course, providing cash.”

The Financial Times last month quoted a senior Pakistani official  as saying of the talks to sell farmland to the United Arab Emirates: “Our aim is not to do away with precious farmland but in fact to raise the productivity of our farms and turn barren land in to fertile farmland.”

On the positive side is the potential for big investments in Pakistan from wealthy Gulf economies looking to use windfall oil profits to diversify away from oil.  According to one expert, the cumulative sovereign wealth fund wealth in the Middle East is now about 1.5 trillion dollars, mostly in the United Arab Emirates; and their assets could triple or quadruple in five to 10 years time.

Pakistan also has an interest in keeping relations sweet with Saudi Arabia as it seeks a deal on deferred oil payments  to ease its own financial crisis. Is this the beginning of a new version of oil for food deals?