Monday, July 4, 2016

Is it Possible to Buy a Country? Australia Fears New Wave of Colonialism


A wave of massive land purchases is taking place around the world. Big investors are spending billions on land acquisition, mainly for crops and livestock. 

This phenomenon raised suspicions. Is this a new way of colonialism? Buying a significant part of a country compromises its sovereignty and reserves. The recent blockade by Australia of the sale of a large tract of land equivalent to 1% of their territory to a consortium led by a Chinese company is the last sample of those misgivings.

The centenarian S. Kidman & Co, star of the controversy, is dedicated to raising cattle for beef export and controls rangelands of about 100,000 square kilometers. The group led by the Chinese company, Shanghai Pengxin Group, which also involved Australian companies, has made an offer, worth about 325 million euros. 

But the Australian Treasury has paralyzed the operation, expressing doubts about whether this offer meets the national interests as "the size and importance" of these assets, which are home to some 200,000 head of cattle. 

One possibility to consider would be to sell the land into smaller pieces to different buyers, because, according to the Australian authorities, no country would allow foreign capital to acquire such a piece of its territory. 

Last year the neighboring New Zealand had already rejected a similar offer from the same company.

More Land Passing into Foreign Ownership 


"Since 2000, 40 million hectares of land, in the world, have passed into foreign hands, more than the size of Germany."

In less affluent countries it is more difficult to impede. Beijing's appetite for buying land is well known in Africa, which is by far the region where most part of its territory has been sold to foreigners, followed by Asia. 

But how much land has been acquired worldwide with investors or for crops and livestock purposes in the last decade? Impossible to know exactly. 

According to Land Matrix, an international organization that tracks such operations, 1,100 purchases of a big scale have been closed since 2000. In total purchases and sales, have passed into foreign hands 40 million hectares. The main investors are: The United States, Malaysia, Singapore, UAE and UK. 

China does not yet appear on the list, but is the second most active country in the purchase of land after Saudi Arabia whether operations that are still under negotiation are recorded.

The United Nations warned in 2008 about this new "food neocolonialism" because greed for land sometimes has a purely financial objective. 


There are mutual funds that include the purchase of land as one way to earn money, which can sometimes subject the crops to the capricious market tensions (eg, interest in promoting biofuel resulted in an increase of soybean prices). 

An example of this concern has been seen recently in the Canadian province of Saskatchewan, which has banned pension funds to buy farmland in the area to avoid "speculation on Wall Street." 

Maybe rent is the solution to this problem, promoting local farmers to use the land as a cooperative way of working. In theory, it should not be a problem if the multinational corporation respects the local laws but we all know how things work in life.

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