Agriculture as ISIS Funding Source

The academic journal Food Policy has published an article by Hadi Jaafar and myself about

“Agriculture as a Funding Source of ISIS: A GIS and remote sensing analysis”

The article is open access and can be downloaded here:

Highlights:

– Recurrent taxation of agriculture is a crucial income source for the Islamic State in Syria and Iraq (ISIS) as extractive and non-recurrent income streams such as oil, ransom and confiscations show signs of dwindling

– ISIS has sustained agricultural production of rainfed winter crops (wheat and barley) despite the impact of conflict. Only irrigated summer crops (cotton) have suffered extensively

– We estimate that in 2015 ISIS might have derived income of $56 million from wheat and barley taxation alone. Additionally there is taxation further down the value chain of food processing and distribution

– The total value of estimated 2.45 million tons of wheat production in 2015 roughly equalled the annualized value of ISIS oil production during its height in late 2014 and early 2015

– Population in ISIS territory likely did not exceed 4 million in 2015, much lower than figures reported in the media of 8 million and more

– Iraq and Syria were wheat net-importers before the war; ISIS is not. It has an exportable surplus which it likely smuggles into the subsidized Iraqi food distribution system or to Turkey where prices are higher

– Agriculture in ISIS territory lives on bought time as supply chains for quality seeds and other input factors are disrupted. Food security and agriculture would need to have high priority in any post-ISIS reconstruction effort

Abstract

Agriculture is an important source of income for the Islamic State in Syria and Iraq (ISIS), which currently rules over large parts of the breadbaskets of the two countries. It has received limited attention compared to other sources of ISIS revenues such as oil, looting, ransom, foreign donations and various forms of taxation. We estimate winter crops production of wheat and barley in ISIS-controlled areas in both Syria and Iraq for the years 2014-2015 and irrigated summer crops production (cotton) in Northeast Syria. We show that remote sensing can give a credible estimation of agricultural production in the absence of statistics. With evidence from MODIS Aqua and Terra Satellites as well as Landsat imagery, we find that agricultural production in ISIS-controlled Syrian and Iraqi zones has been sustained in 2014 and 2015, despite the detrimental impact of conflict. After a drought in 2014 production was able to capitalize on improved rainfalls in 2015. First indications show that the winter grain harvest of 2016 in Iraqi territories of ISIS was significantly above pre-conflict mean and below pre-conflict mean in its Syrian territories. We also show how water flows along the Euphrates have impacted production. We estimate the revenue that ISIS can derive from wheat and barley production and the likely magnitude of an exportable surplus. Agricultural production gives the group a degree of resilience, although its economy is not sustainable in the longer run and could be affected by military collapse. Taxation of recurrent income streams such as agriculture will become more important for ISIS as its extractive sources of revenues show signs of dwindling. Beside non-grain food imports, agricultural production is crucial for its political legitimacy by ensuring food provision to the broader population. Food security considerations would require a high priority in any post-ISIS reconstruction effort and would need to include the rehabilitation of supply chains for agricultural inputs such as quality seeds and fertilizers.

 

MENA Food Trade Relations and Tropical Countries

The academic journal Food Security has just published a special section about MENA Food Trade Relations with Tropical Countries. It contains papers from a conference in Barcelona that was organized in January 2015 by CIDOB and the OCP Policy Center.

The introduction with a short description of all papers is open access and can be accessed here.

“The Middle East and North Africa (MENA) region is not only the largest oil exporter of the world, it is also its largest food importer. This import dependence will grow, given limited water and land resources on the supply side and population growth and more diversified diets on the demand side. In contrast to earlier food regimes, an increasing share of the MENA’s staple food imports such as corn, soybeans, palm oil, poultry, rice and sugar comes from tropical countries such as Brazil and Indonesia, where dramatic agricultural expansion has taken place. Other tropical regions such as Sub-Saharan Africa have looked to emulate such agricultural experiences, which are often based on large-scale and input intensive farming models. While such expansion processes have increased trade options of major importers such as the MENA, China and Japan, they have also had questionable ecological and socio-economic implications in the respective tropical countries.

Against this backdrop Eckart Woertz and Martin Keulertz set the scene in the opening article by analyzing food trade patterns of the MENA and the relative importance that tropical countries play in MENA food supplies. Their trade contribution has changed over different food regimes and now encompasses staple foods such as corn, rice and soybeans beside classical tropical export commodities. Woertz and Keulertz also discuss agricultural investment flows from the MENA to the tropics, associated political and socio-economic issues, a pronounced implementation gap of such investments and how they relate to MENA food security strategies. One of their conclusions is that food trading houses, storage strategies and brownfield investments in developed agro markets are more important as a trend than the widely publicized intention to acquire land in greenfield projects in developing countries.”

Call For Papers: Africa, Latin America and the “Asian Century”

OCP Policy Center and CIDOB invite the submission of papers that explore Reconfiguration of the Global South: Africa, Latin America and the “Asian Century”.

The conference will be held in Barcelona on 27-29 January 2016. For the full call for papers click here.

Proposals should be submitted electronically to ewoertz@cidob.org and lilia.rizk@ocppc.ma no later than 30 October 2015.

Papers can deal with a broad based variety of topics that explore the mutual relationship and the positioning of the two continents in the emerging “Asian Century”, such as:

– Rise of emerging markets countries and what it means for an increasingly multilateral international system.
– New geopolitical constructions of the Global South: Asian vs. Western interests in Africa and Latin America.
– Theoretical approaches to democratization, transition and development.
– Trade and investment relations.
– Domestic growth strategies and development cooperation, particularly in infrastructure financing, energy, environmental preservation, agriculture and food security.
– Port cities and their role in facilitating exchange between the two continents.
– Maritime security and hard security issues.
– Free trade areas and regional association agreements.
– Migrant communities and cultural relations.
– Sustainable management of cities.

Commodities Trade in the Atlantic Space

I have just returned from the Atlantic Dialogues conference 2014 that has been organized by the German Marshall Fund and the OCP Policy Center.

In terms of food security issues it was quite interesting that considerable know-how transfer is taking place between Brazil and Sub-Saharan Africa and that Morocco tries to position itself as fertilizer provider of choice to both agricultural regions. (On this issue also see my recent article in Third World Quarterly about Mining Strategies in the MENA).

The Atlantic Dialogues conference is in its third year now and adds a south-south dimension to the notion of Atlantic Space. This year a conference volume has been published that can be downloaded here.

This chart in my article about the transatlantic trade in agricultural and mineral commodities highlights some interesting facts.

The following conclusions can be drawn for the transatlantic trade in commodities:

  • Mineral fuels dominate the global trade of commodities, the Atlantic Space is no exception.
  • No country in the word is energy independent. There is a varied trade of refined products besides the trade in mineral fuels. Some crude oil exporters like Nigeria, Angola, Mexico, and Brazil are net importers of such refined products. Net importers of crude oil like the United States and the EU, on the other hand, are net exporters of refined petroleum products.
  • China has developed into a major importer of mineral fuels, oil seeds, ores, and precious metals from Africa, Latin America and the Caribbean, and North America. Yet despite this widely publicized rise of China, the Atlantic trade in commodities is still a dominant factor in global comparison.
  • The transatlantic trade ties in commodities are particularly close between North America and LAC, on the one hand and between Europe and Africa on the other hand. Trading relations between North America and Africa and between the EU and LAC are also substantial. The focus of this North-South trade is on mineral fuels, ores, precious metals, oil seeds, and tropical agricultural products like cocoa, coffee, and fruit. There is not only a lively trade of refined products from North America and the EU to Africa and LAC, but also between the two northern blocs of the Atlantic Space.
  • In comparison, South-South trading relations lag behind in the Atlantic Space. However, because of its underdeveloped agricultural potential, Africa is a major importer of cereals and sugars, which partly come from LAC, and Morocco has developed into a major supplier of fertilizers to Brazil.

A Sheikh, Ethiopia and Pitfalls of Journalism

“Last year, Al Amoudi, whom most Ethiopians call the Sheikh, exported a million tons of rice, about seventy pounds for every Saudi citizen.” This is the remarkable claim of Frederick Kaufman in an article in Harper’s Magazine about the agro-investment of the Saudi billionaire in Ethiopia’s Gambela province.

Mr. Kaufman calls it “the great grain robbery” and alludes to the namesake event in 1972 when the Soviet Union appeared as a large buyer of US grains for its livestock program, bidding up prices to the ire of American consumers.

To put it into perspective: one pound of rice gives about five servings, so 70 pounds make 350 servings. Every Saudi eats a bowl of Ethiopian rice each day according to Mr. Kaufman!

Saudi Arabia imported 1.3 million tons of rice in the trade year 2013/14 according to the US Department of Agriculture and does not have domestic production. This would mean that Ethiopia accounted for the large majority of Saudi rice consumption. As rice constitutes 11 per cent of the calorie intake of Saudis according to the FAO it would also mean that Ethiopia has provided almost a tenth of Saudi Arabia’s dietary needs! An astonishing feat for a country that was the largest food aid recipients of the World Food Program (WFP) in 2012. If true, it would be alarming.

Alas, it does not show in the trade statistics. The PSD database of the US Department of Agriculture has no record of Ethiopian rice exports whatsoever. The COMTRADE based Trade Map database of the International Trade Center not really: In 2012 it reports Ethiopian rice sales of $4,000 to Saudi Arabia out of total exports of $5,000. That is virtually nothing.

Mr. Kaufman does not share the source for his 1 million ton claim. Unfortunately for him, almost three quarters of Saudi rice imports come from India and another 10 percent from Pakistan according to the Trade Map statistics. South Asia is where basmati rice is mainly grown, which the Saudis prefer over the sticky white rice that is grown in South-East Asia and the US. This preference is also why Al Amoudi has tried to introduce basmati cultivation in Ethiopia with the help of Pakistani experts and foremen.

Cereal yields in Ethiopia are around 2 tons per hectare according to the World Bank, on the higher end compared with most other African countries, but considerably below Thailand (3.1 tons) the US (5.9 tons) or Vietnam (5.5 tons). As Al Amoudi has just started his project and is introducing a new crop it is unlikely that he can produce very much above the national average. This would mean that the production of 1 million tons of rice in Ethiopia would require 500,000 hectares of land.

Al Amoudi has a lease for 10,000 hectares. Mr. Kaufman does not tell us from where Al Amoudi might have gotten the other 490,000 hectares. Not to mention that Al Amoudi has considerable production problems and it is unclear at this stage whether his project will succeed.

Mr. Kaufman also does not share with us how Al Amoudi managed to get 1 million tons of rice out of Gambela, a remote province with poor infrastructure and far away from any port. The Indian investor Karuturi who launched farming operations in Gambela as well and is now in serious economic trouble mulled exporting cereals with barges via South Sudan, a very unlikely scenario given the current civil war there. Mr. Kaufman himself describes dirt roads that start right after the airport in Gambela; he also speaks of “pilot rice paddies” without suggesting how one would be able to produce 1 million tons of rice with such limited operations.

In case it has not become clear by now: Mr. Kaufman’s central claim of 1 million tons of Ethiopian rice exports to Saudi Arabia is certifiably bogus. Harper’s does not seem to have a fact-checking department, which is rather surprising for a magazine of that size.

Mr. Kaufman says hat “the terms of the deal have never been released.” This is not exactly true as the lease agreement of September 2009 was posted on a website of the Ethiopian government before taken offline in 2012. For convenience I post it here.

For a 50-year lease of 10,000 ha of land Saudi Star pays 300,000 Ethiopian Birr annually. This is currently equivalent to just $15,321 and the contract does not even make stipulations for inflation adjustment. Al Amoudi has announced that he intends to lease an additional 290,000 ha from the Ethiopian government, but so far 10,000 hectares is what he’s got, to the best of my knowledge.

So with $1.53 per hectare the lease terms are even better than the $7 of Mr. Kaufman’s estimate and considerably lower than the $1,250 per year and hectare that he mentions for Zambia. Zambia is a more mature agricultural market with export outlets towards South Africa, so its land prices should be higher, but Mr. Kaufman is right to wonder how such lease terms come about and whether political backroom deals might have something to do with it.

He has apparently been in the country, if only for a few days, he has met with decision makers and he has visited Al Amoudi’s Saudi Star project. There have been indeed problems on the project as the killing of Pakistani foremen has shown and Ethiopia’s strategy of Agricultural Development Led Industrialization (ADLI) has been accompanied by grievances and state led resettlements as I point out in Oil for Food.

Mr. Kaufman had a unique chance to tell us something about such problems at the crossroads of subsistence lifestyles, development ambitions, foreign direct investment, political conflict and influence trading. Unfortunately he didn’t. He chose to make bogus claims and tell us a land grab story that is sexy and sells. After all Saudis are authoritarian, religious fanatics who do not let their women drive. Isn’t it perfectly logical to add a neo-colonial land grab to that list? And isn’t that what the reader wants to hear? Including unverified rumors about Mr. Al Amoudi’s alcohol intake, Al Qaeda financing and predatory attitudes of his men?

When reading the article one cannot escape the impression that this is neither a story about Al Amoudi, nor about disenfranchised Ethiopians, but about the author himself – an intrepid Indiana Jones who takes the reader by the hand on a journalistic hit and run mission to the dark heart of Africa. To beef up his credentials, Orientalisms are dropped and suggestive language is used without serving any obvious analytical purpose.

Based on a second hand account he refers to locals who live “in picturesque villages, undisturbed by modernity”, all the while Gambela is increasingly affected by a rather modern civil war in neighboring South Sudan. Corresponding refugee flows are shortly mentioned in a footnote. At no point one gets an idea about the local population and how it has been affected by the Saudi Star project. Mr. Kaufman has apparently not interacted with them. Meanwhile he suggests that the Saudi Star compound with its white barracks and satellite dishes seems to belong to a “Bond villain.” Our hero has to face down “fat black beetles” that attempt to crawl in his bed while spending the night there, remarkably on the invitation of the men of the very “Bond villain.” (It also would appear to me that the villains in Bond movies usually have more assuming residences than white barracks).

Al Amoudi was born in Ethiopia to an Ethiopian mother and a Saudi father and later migrated to Saudi Arabia where he made his money. To call him a “billionaire from Ethiopia” obscures more than it illuminates and it would have been interesting to learn more about Saudi-Ethiopian relations and what role Al Amoudi plays in them. Instead, we jump from Alexander the Great’s quest for the Nile sources to Ethiopia “the khat capital of the world”, only to end up again with Al Amoudi, who is termed a “whisky drinking marauder”, like all the folks of international organizations who hang out at the bar of the Sheraton in Addis, which he owns.

In short, another piece of sensationalist journalism and a disservice to a more sober and credible discussion about land grabs and associated development challenges.

Reply to Thoughtful Review of Oil for Food in the Middle East Journal

Jane Harrigan has given a thoughtful critique of Oil for Food in the Middle East Journal, Vol. 68, Issue 1, 2014. She outlines the historical part with the critical supply situation during World War II, the food weapon, the modernization of agriculture in the postwar years and the political economy of food in the Gulf countries. While she deems these parts and the depiction of the failed Sudan breadbasket strategy “fascinating”, she objects to my  “sanguine” account of current Gulf agro-investments.

As I describe the Sudan breadbasket episode of the 1970s as an unmitigated disaster and use it as a cautionary tale for current Gulf endeavors this is not immediately obvious.

Harrigan acknowledges that I acknowledge important concerns in the land grab debate like the threat of disenfranchisement of customary land rights’ holders and limited employment benefits. However she would have liked to see a more extensive discussion of these aspects.

She objects in particular to my sub-chapter “A land grab that wasn’t“ in which I use field work in the Gulf countries and the Sudan to point out that there is a huge disconnect between media reports about land grabs and actual implementation on the ground. I further argue that such misconceptions have sometimes been amplified by well meaning reports of advocacy groups, among them the first version of the Land Matrix by the International Land Coalition (ILC) and a number of think tanks that has used such media reports as data source (p. 144f).

Harrigan does not discuss this criticism of mine or marshals evidence to the contrary. But she argues unperturbed that “ample evidence is now available, especially from the International Land Coalition’s work,” about the threat of foreign agro-investments.

I do not dispute this threat in qualitative terms and discuss it as far as it has materialized, like in Sudan in the 1970s, on some of the Sudanese projects today (e.g. the Merowe Dam) or on the Saudi Star project of Saudi billionaire Al-Amoudi in Ethiopia.

Yet in quantitative terms the threat has been exaggerated as I outline in said sub-chapter, certainly for the Gulf countries, but also for China as the works of Deborah Brautigam and Rural Modernity have shown.

So in a way Harrigan is blaming me for not parroting media reports. It would be better to either hold those accountable who have used them uncritically or show empirical evidence of Gulf agro-investments with said effects that I have failed to mention.

In fact, the ILC and its partners have revised the Land Matrix considerably in the meantime, have gotten rid of many paper projects and paint a more accurate picture now.

The problem of exaggerated quantitative claims and the need for more qualitative studies has recently also been highlighted  by Marc Edelman in a special issue of the Journal of Peasant Studies about methodological issues of land grab research.

In a way Harrigan seems to be uneasy about the “ample evidence” herself. At the end of her review she suggests that the implementation gap may well exist, but claims that negative effects would still occur in the form of preemptive displacements to empty land for investors.

In Ethiopia and on the earlier rainfed projects in Sudan this seems to have happened indeed as I write in Oil for Food; for the irrigation projects in the north of Sudan the situation is somewhat different. The land along the Nile is in private smallholder ownership and not targeted, while the land on the plateau above the river is formally state owned, barren and only usable for extensive pastoralism as long as no investments in irrigation infrastructure are undertaken.

To suggest a mere announcement or even a formal deal without actual investment would lead to an immediate displacement is rather unrealistic in such cases and tends to overrate coercive capacities and economic incentives on part of local governments. In fact in quite a few cases officials were unable to locate announced project sites and locals were not aware of them. In the cases where nothing is there, what am I supposed to write about?

Harrigan says that the US used the food weapon in retaliation to the formation of OPEC, which is not something that Oil for Food claims, as the height of the food weapon was in the 1970s not in 1960 and it was used or contemplated in retaliation to the Arab oil embargo, the Iranian hostage crisis, to rein in Nasser, to entice moderation in the Arab-Israeli conflict and push an already established OPEC to cooperate on global food issues during the World Food Conference 1974. But this is a minor thing.

To sum up, I fail to see how I portray an “unjustifiably rosy” picture of Gulf agro-investors as I discuss on multiple occasions their misguided belief in large scale project designs and their real estate centered mentality, which leads to an obsessive focus on formal land ownership and disinterest in joint equity projects with local stakeholders.

All I try to do is to give a differentiated picture and point out an implementation gap that has even grown since Oil for Food was written. Being “sanguine” is different. Land grabs in Africa seem to be bad business as the plummeting share price of Indian agro-investor Karuturi, the travails of Amoudi in Ethiopia or the Sudanese failures show.

Instead of claiming the counterfactual opposite, Oil for Food tries to find an explanation why so many projects have failed or have not been implemented in the first place. It also tries to consider the importance of local factors, domestic agro-investors and national development plans that outweigh the importance of foreign agro-investors and act in lockstep with them.

Coming back to Ethiopia, its government is equally frustrated, as it has hoped that foreign agro-investments would help kick off an agriculture led modernization. It now considers withdrawing concessions.

If any land investment were bad and threatened food security, these developments would mean an improvement. In the specific cases this might even be true, but overall there cannot be any doubt that more investments are needed given Africa’s declining food production per capita over the last decades.

Hence maybe the solution is somewhere in the middle. This might neither be in line with overtly romantic views of subsistence agriculture nor with hyperbolic profit expectations of 30 percent and more that are peddled by some investors, but a more realistic and sober approach in the land grab debate is needed.

Half of World Population Dependent on Food Trade by 2050

“Eating on an Interconnected Planet” is an interesting article by Graham K MacDonald in the Environmental Research Letters 8/ 2, 2013.

It argues that more and more countries will need to rely on food imports to satisfy their food needs. This will be the case for 51 percent of the world population by 2050, depending on expected population growth and development of agricultural productivity.

Over the last decade 70 percent of global cereal exports were undertaken by only 8 ocuntries that constituted only 11 percent of the world population. Hence such increase in global food trade will constitute a formidable challenge, but also a potential increase in geopolitical leverage for exporter countries.

Politicization of food trade that is outlined in the food weapon chapter of Oil for Food will  possibly increase. In the 1970s the US tried to exert pressure on Arab countries to counter their oil boycott. Gulf countries were clearly concerned as their Sudan bread basket plan and their reaching out to Australia for oil for food barter deals showed.

Later the US implemented a grain embargo against the Soviet Union. On other occasions it hoped to dampen domestic food inflation by export restrictions, very much like Argentina, Vietnam or Russia did during the global food crisis of 2008.

Politicization of food trade would not be  good news for the Middle Eastern countries that are the most food import dependent countries in the world as the following chart from MacDonald’s article shows:

Figure 1.

The chart describes the countries of origins of key crops (maize, milled/paddy rice, soybean, and wheat) that are imported by 49 countries that have lost the ability for self-sufficiency because of either water or land constraints or both.

Beside the Middle East and North Africa this is also the case in Mexico,Southern Africa and the OECD countries Italy, Netherlands, UK and Japan. Egypt, the world’s largest wheat importer is not included in the map, which looks rather strange, given the fact that its land reserve is maxed out and its future irrigation potential might be compromised by unfolding hydropolitcis along the Nile.

The large weight of the US as an exporter nation also appears rather dominating in the  chart compared to Brazil, Australia, Canada and Russia, all of which are major exporters of soybeans and  cereals. I doubt that this exactly reflects global food trade patterns, but possibly the trade with the 49 disadvantaged countries on the map. Here, the dominating US role might be the result of politically motivated food aid shipments, preferential trade agreements and other related factors.

Yet the basic message for a region that already imports a third of globally trade cereals is clear: The future of food security in the Middle East and North Africa are food imports. Maintaining them will require export revenues beyond oil, liquid global food markets and maneuvering their geopolitics which will likely become more tricky.

UK Forbids Shell to Pay Iran Debt in Food

The UK government has not granted permission to Shell to pay  outstanding debt it owes to Iran in food and pharmaceuticals.

Shell owes Iran $2.3 billion on earlier oil deals and has an interest to repay this debt to maintain good relations with the OPEC producer.

As financial sanctions prevent payment in cash Shell sorted out possible barter deals with British pharmaceutical company GSK and global grain trader Cargill. Iran is already trading part of its oil in barter deals with Pakistan or against non-convertible Rupees in the the case of India.

Food has been exempted from Iranian sanction regimes, yet Iran switched from the US to Australia as a major supplier at the height of the hostage crisis in 1979 out of fear of US food boycotts as I outline in chapter 4 of Oil for Food.

As a result of droughts Iran has increasingly resorted to food imports in recent years, also from the US of all things. This happened despite efforts at self-sufficiency, particularly in wheat.

While Iran managed to increase wheat production in the 2000s, this happened at the expense of other food items like vegetables and meat that witnessed an import boom.

Self-sufficiency remains elusive and the country continues to e dependent on grain imports, which it regards as a strategic liability in light of the current sanction regime.