The Water–Energy–Food (WEF) nexus is a development challenge in the Arab world,
particularly in the ‘core nexus countries’ with low to mid-incomes in which limited
water endowments permit agricultural production, such as Egypt, Morocco, Tunisia,
Lebanon, Algeria, Sudan and Jordan. The WEF nexus is often conceptualized in mere
technocratic terms, yet politics matter in the implementation of projects that address it.
Internalizing hydrological externalities or leaving them as they are and financing them
as a public good requires states whose capacities have been reduced as a result of
neoliberal reform. The article explores five different pathways of how Arab countries
could finance green growth projects ranging from regional financial markets to
concessionary loans by funds from oil rich Gulf countries.
There are only a few current projects in the category 5) and they target food production for the domestic African market, not for export to China, which would not make commercial sense for logistical reasons.
Like in the case of the Gulf countries there is a certain disconnect with media reports and their inflated numbers about land grabs.
Among such investments have been Tnuva, the Israeli cheese and consumer foods supplier, US pork producer Smithfield Foods, the UK breakfast brand Weetabix and Australian winemaker Hollick. Chinese grain trader COFCO has recently spent $1.5bn on a stake in a sugar, soyabean and wheat joint venture with Hing Kong based Noble Group.
It seems that China prepares to compete with the Cargills and Nestlés of this world rather than directly gobbling up farmland in the upstream sector. There are some large food processing companies in the Gulf that operate internationally like Kuwait based Americana. Gulf countries have also shown a similar, if more subdued interest in trading companies as I describe in Oil for Food, but compared with China they have arguably less capacities to realize such strategies.
The interesting snippet of information is that they see the food share of total consumer spending of $300 billion at 28 percent.
This would be pretty high. Not as high as in developing countries where this share is mostly between 40 and 60 percent, but higher than in OECD countries where its ranges mostly between 10 and 20 percent.
This was also the range that was mostly given in a survey by YouGov Siraj in 2007 (see on page 34). However, the survey revealed also that about ten percent spent between 30-50 percent and more on food. Additionally it might have had a sample bias as it was conducted over the internet with incentivized participants. As poor migrant workers often do not have internet access or are illiterate they might have been underrepresented due to sample bias.
The really deplorable thing is that we do not really know. Gulf statistics are not reliable and lack detail. The share of food in the general Consumer Price Index (CPI) is 26 percent in Saudi Arabia, 14.3 percent in the UAE, and 18 percent in Qatar and Kuwait.
The ethanol production at the Kenana Sugar Company in Sudan, which is half owned by Saudi and Kuwaiti capital is an outlier. Its ethanol production makes better use of molasses by-products of sugar production and takes advantage of European subsidies for ethanol, but is hardly an end in itself.
If implemented, the Jatropha project of Saudi Tala would be a first as far as Gulf investors are concerned.
“And so China stopped the financing [the project]” he added.
Bashir said the Qataris decided to step in and provide the loan after Beijing backtracked.
“The ball is now in the court of our Qatari brothers”.
The comment section to the article reveals a lot about the prejudices and bitterness between the North and the South. It also contains some inflated hopes about the Gulf countries as white knights with deep pockets. My personal favorite is this one:
1 March 06:10, by Jalaby
“Not a problem at all, Chinese are making billions of dollars as profit from investing in Sudan, China will loss,our Arabs brothers will take over as all the infrastructures projects in Sudan are financed by Arabs and implemented by China,our Arabs brothers are making excellent profit from their successufull investments in Sudan,Kenana Sugar Factory will always stay solid example”
Well the Kuwaitis are the largest shareholder of Kenana and would beg to differ. According to a WikiLeaks cable a Kuwaiti official opined that Kuwait did not get its money out of Kenana for 30 years…