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Ukrainian agro-cooperation prospects with MENA-countries

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The Ukrainian agro-industrial complex (AIC) has been traditional subject of both interest and scare for foreign investors. Despite high-yielding black earth lands, sufficient water resources, agricultural traditions and cheap yet qualified labour force, foreign companies are scared off by corruption and unfavourable business climate.

In addition, ownership of Ukrainian agricultural lands still may not be acquired – the government has not yet adopted the land sale moratorium. However, this does not prevent investors from working under long-term lease schemes, accumulating vast land banks and promptly earning money due to export of agricultural products.
There are at least 15 companies in Ukraine having farmland bank that exceeds 100,000 hectares. These are large latifundia that actively develop both plant production and storage and processing of animal products. As a rule, these are companies where Ukrainian stock prevails. However, even today large western companies, as well as Arabic companies operate both as traders and manufacturers in Ukraine. Such companies have adapted to the Ukrainian reality.
Firstly, it is important to mention NCH company with its headquarters in NY, as well as its regional offices in other countries within the region, in particular, Russia, Latvia and Romania. According to expert assessments this company cultivates 400,000 hectares of Ukrainian land. The Ukrainian Agrarian Investments Company founded by Russian Renaissance Partners Company has land bank of no less significance. This company has approximately 240,000 hectares of land under lease.

Swedish companies are also active market participants. Thus, Alpcot Agro controls 93,000 hectares of Ukrainian land concentrated mostly in the country’s West. In 2012 this Swedish company has focused on maize and wheat production and has harvested thousands of tons of grain and oil crops in 2012. In addition, there are also other Scandinavian participants on the market. Thus, Trigon Agri, with its headquarters in Copenhagen, operating also in Russia and Estonia, controls approximately 55,000 hectares of Ukrainian land, and the world known Swiss Glencore Company grows agricultural products on over 80,000 hectares of land.

French businesses are also among active market participants and one of them is AgroGeneration Company that has control over approximately 52,000 hectares of land. Recently it has decided to merge with the American SigmaBleyzer Company that also invests in the Ukrainian agro-industrial complex. As a result, Ukrainian market will meet a company cultivating approximately 120,000 hectares of the country’s land.

There is also a number of small agricultural enterprises with foreign stock that cultivate few thousands hectares of land. Thus, foreign companies control approximately more than 1 million hectares of high-grade lands while Ukraine has 40 millions of cropland in total. In addition, latifundia being considered large by Ukrainian standards and having land banks exceeding 50,000 hectares of land, controls about 5.5 million hectares of land. The rest of lessees are represented by small companies with performance decreasing every year, which are forced to sell their businesses to larger market players.

It is AIC market consolidation that is the main Ukrainian trend within the last 3-4 years. In 2012, 7 companies have increased their land bank by more than 20,000 hectares by way of purchasing smaller and weaker businesses. The leader is Kernel Company, which specializes in oil crops and has increased its land bank by 120,000 hectares in 2012.

Meanwhile, Eastern companies are only examining the Ukrainian market, first market entry attempts being made by Arabic companies. Their potential interest may be cultivation of more than 1 million of Ukrainian land. However, nowadays they only try to adapt to Ukrainian reality and follow the way of Western corporations.
Interest of Arab companies is easy to understand as Ukraine is one of the serious trade partners for Arab countries supplying grain crops to them. According to the 2011/2012 marketing year results Arab countries are apparent leaders in grain import in total share of Ukrainian export. Thus, their share in export of Ukrainian barley is 87% with fair share of 69% belonging to Saudi Arabia. Ukraine also exports 44% of wheat in these countries, and Egypt is its largest importing country with a 22% share. There is also 41% of maize export falling on Arab countries. The largest export share also falls on Egypt and comprises 26%.

Naturally, under such import performance entry of foreign companies to the production market is only a matter of time as Ukraine fits excellently the national foreign investment strategies to ensure food security.
However, Arab investors are now only beginning their entering the market. Thus, businessmen from UAE expressed their interest in entering the Ukrainian market already during Yushchenko’s presidency; however, these were just talks. At the same time, investors from Saudi Arabia are more decisive. This year consortium of Arab investors including such largest companies as Almarai and Al Rajhi, purchased Continental Farmers Group Company having small land bank in Ukraine and Poland (23.7 thousand hectares and 2.5 thousand hectares of farmland, respectively). It should be noted that, having production capacities in Agypt, Jordan and UAE, Almarai with its specializing in dairy, baking, juice and other types of production markets 65% of its products in Saudi Arabia. In its turn, Al Rajhi has been operating in Ukraine since 2006 through International Investment Co LLC., and is engaged in grain trade.

Ukrainian experience of these companies may become a litmus paper for activation of Arab investors on the market. Such investments have quite many potential stakeholders. Among Saudi Arabic companies one may mention Foras International Investment Co. This company has experience of work in Tatarstan (Russia) and Bosnia and Herzegovina and meanwhile develops AIC direction in African countries such as Mali, Senegal and Sudan. Among UAE companies we may mention Al dahra Agricultural Company as potential investor. This company has subdivisions in Egypt and Pakistan. In addition, governmental Abu Dhabi Fund for Development (ADFD) also is potentially interested in investments in Ukraine. This company has agricultural assets in Morocco, Mauritania, Senegal and Egypt. Among other Qatari companies with potential interest in entering the Ukrainian market we may mention national structure, the Hassad Food Company. This company is an active participant of land and AIC company sale and purchase markets in Pakistan, India, Australia, Turkey, Brazil, Nigeria, Ghana, Sudan, and, what is important for future work in Ukraine – in Russia. Among potential Kuwaiti investors to the Ukrainian AIC one may call Kharafi Group. Food industry is not primary business for this company; however, it has experience of successful work in this direction.

It should be noted that there will be no mass entry to the Ukrainian market of governmental structures from Arab countries which could purchase agricultural business directly as they do in Eastern African countries. In case of large inflow, investments shall be made by investors entering the existing Ukrainian companies with further increase of land bank in case of adaptation to social and economic reality.
There are also many talks in Ukraine about investments from China. However, there are currently no obvious practical steps by Chinese investors towards coming to the agricultural production sector observed.

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Eastern Europe

Did Russia Really Win in the 2008 August War?

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Eleven years have passed since the short Georgian-Russian war started on August 7-8 in 2008. As every discussion on who started the war generally is, the Georgian-Russian one too is about finding moral grounds for military actions which both sides took at the time.

Morality in geopolitics, and the Georgian-Russian conflict is indeed caused by pure geopolitical calculations, is at most times a superfluous thing. All these years the Russians have been trying to convince the world and the public inside the country that the Russian military moves actions and subsequent recognition of the independence of the Abkhazia and Tskhinvali regions were the only possible and correct actions to be taken. The Georgians also have their dilemmas: some marginal political figures still believe that it was the Georgian government that was most to blame for the catastrophe of 2008. Though close geographically, these diverging narratives and the constant need to prove one’s own truth says a lot about how far apart Georgia and Russia have grown in the past decade.

11 years since the war and it is still unclear what Russia has gained from its military and diplomatic actions since 2008. True, military build-up in Abkhazia and Tskhinvali Region limited Tbilisi’s ability to become an EU/NATO member state. Moreover, Russian intervention into Georgia in 2008 also showed the West how far Moscow can go if a strategic decision is made to draw Georgia into the alliances. At the time (August-September 2008) those seemed to be long-term (strategic) victories for Moscow. In international relations and geopolitical calculations, you can stop a country from attaining the aims harmful to you, but in the long run you will be unable to reverse the process by forceful actions alone: you have to provide a counter-policy to turn an unfriendly state into an amenable neighbor.

Put all of this into the Russian case. More than a decade has passed since 2008, only a few not-so-important states recognized Georgia’s territories as independent entities. The Georgian public is overwhelmingly anti-Russian, the last hopes of a grand geopolitical bargain – the return of the territories in exchange for reversing EU/NATO aspirations – have disappeared among the Georgian public, and support for western institutions so far has only increased.

In the end, though Moscow waged a reasonably costly war in 2008, took and still experiences a diplomatic burden for its moves against the West, and has yet to attain its grand geopolitical goal of reversing Georgia’s pro-western course. Politicians in Moscow, at least strategists behind the scenes, all understand that Georgia’s persistence, which seems naive today, might turn into serious business if Russia’s geopolitical positions worsen elsewhere in Eurasia.

Indeed, there are signs that Russian influence is set to diminish further in the former Soviet space as the country’s economy is unlikely to be attractive to the neighboring states. Imagine a scenario where Russian internal problems (Putin’s upcoming succession, economic downturns, China’s rise, stronger Ukraine, etc.) weigh ever stronger upon the Russian decision-makers in the 2020s, then Georgia’s western aspirations might become more concrete – it will be easier for the West to make a strategic decision to draw Tbilisi into EU/NATO.

Overall, Russia definitely gained significant results in 2008, but in the long run it did not change the strategic picture in the South Caucasus, though it did produce a grand design for geopolitical domination in north Eurasia: years after the war, Moscow initiated its Eurasian Economic Union (EEU) to draw its neighbors into one economic space – a prerequisite for building a world power. Ideally, it should have attracted Russia’s major neighbors and it would have served the people of the former Soviet space economically. But Moscow failed to get Ukraine and other states involved: without Kiev, the EEU, if not dead, is at least a marginal project. This means that Russian policies towards Georgia and the wider South Caucasus remain the same as before 2008 – keeping foreign powers out of the region, while failing to provide an alternative vision for Tbilisi.

Author’s note: first published in Georgia Today

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Eastern Europe

Lithuania’s new chief of defence has no chance

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Lithuania’s new chief of defence, Major General Valdemaras Rupsys calls himself a realist though it seems as if he is a fatalist with no hope to change anything in the national armed forces.

In a detailed interview with BNS Valdemaras Rupsys demonstrates his inability and even lack of hope to modify national military system. He distinctly reveals his plans.

Major General Valdemaras Rupsys says he will seek to accelerate new armored vehicle and artillery system purchases if the country’s defense spending makes this possible.

The key words here are “if the country’s defense spending makes this possible”. The matter is Lithuania itself can rely only on foreign financing and help to strengthen its defence. Thus, he informs that a number of Boxer IFVs are currently being delivered to Lithuania. Renamed “Vilkas”, or “wolf” in Lithuanian, the vehicles will be provided only to two battalions of the Iron Wolf mechanized infantry brigade, in Rukla and Alytus. It should be noted that Mechanized Infantry Brigade “Iron Wolf” is the core unit of the Lithuanian Army and forms the country’s contribution to NATO collective defence. But even this unit will not be provided with all necessary vehicles and equipment.

The brigade’s other two battalions, in Rukla and Panevezys, will continue to use old M113 armored personnel carriers, with plans to replace them with more advanced vehicles by 2030. No budget money – no vehicles!

Major General Valdemaras Rupsys admits that the only thing he can definitely do – to speak to the authorities. “We’ll definitely have to speak to the ministry about whether there are possibilities to replace their platform earlier than planned,” the general told in an interview. “Plans call for doing so in around 2030 but everything depends on financial resources. There won’t be any drastic decisions to replace the acquisitions that we are already planning now,” he added.

When he answers to the question if the Iron Wolf brigade needs tanks he is very flexible and says that “being aware of our means and financial capacity, I don’t dream about tanks right now. We don’t have such plans.

Another question is if he dreams about fighter jets in the Lithuanian army. And he again says – “No, I don’t today. I am a realist and don’t dream about things we cannot have.”

The worst thing is his full satisfaction with the existing situation. He will not even try to change things. In terms of conscription system he shifts the responsibility on the political leadership, on the whole, which should decide on that. And then what is his responsibility? Does Lithuania need such a chief of defence who decides nothing from the very beginning?

Obviously, Lithuania has no money, but according to Major General Valdemaras Rupsys Lithuania even lacks of ambitious either to be a strong country. Possibly, this aim could be reached at the expense of others. At least he is honest.

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Eastern Europe

Polonia: Poland’s diaspora policy

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In 2007, the Polish authorities for the first time adopted a government program to promote cooperation with the Polish diaspora (Polonia) and Poles abroad. In 2002, they introduced May 2 as Day of Polonia and Poles Abroad.

The strategic objectives of this program for 2015-2020 include support for the development of Polish language and culture among Poles abroad, strengthening Polish national identity among representatives of Polonia, contributing to the popularity of Polonian organizations abroad and the return of Poles living abroad to their homeland, establishing economic, scientific and cultural contacts between Poland and Polonia .

The Polish Foreign Ministry estimates the number of members of the Polish diaspora, including ethnic Poles and people of Polish descent, at 18-20 million, one third of them were born in Poland. Polonia and the Poles rank the sixth if we compare the proportion of members of the diaspora abroad with the population of the country of origin. 18% of tourists visiting Poland are members of Polish organizations abroad and ethnic Poles.

The largest Polish diasporas are in the USA (9.6 million according to 2012 reports), in Germany (1.5 million) and Canada (1 million). Poles are also living in France and the United Kingdom (0.8 million in each), the Netherlands (0.2 million), Ireland and Italy (0.15 million in each), the Czech Republic (0.12 million), Sweden and Norway ( 0.11 million in either), Belgium (0.1 million). In countries such as Austria, Spain, Denmark, and Iceland, members of the Polish diasporas number less than 100 thousand people.

According to the Polish Foreign Ministry, more than 1 million Poles and people of Polish descent live in post-Soviet countries. According to the ministry, these estimates are not accurate – for one,  in Belarus, the most “Polish” republic of the former USSR, the number of Poles and people of Polish origin could amount to up to 1 million (official reports estimate the number of Poles living in Belarus at 295 thousand).

Lithuania comes second by the number of Poles residing there – (250 thousand), the third is Ukraine (144 thousand), then Russia (47 thousand), Latvia (46 thousand) and Kazakhstan (34 thousand) – the fourth, fifth and sixth, respectively.

Polonia is conditionally divided by the Polish Foreign Ministry into ten functionality-based geographical groups: 1. Lithuania 2. Belarus 3. Ukraine 4. Latvia, Moldova, Romania, Slovakia, Hungary, the Czech Republic 5. Western European countries (Great Britain, Germany, France, Italy, Denmark, Switzerland, Sweden, etc.). 6. USA, Canada, Australia, New Zealand 7. Other European countries 8. Russia, the Caucasus, Central Asia 9. Brazil, Argentina 10.Other countries of the world.

This division was carried out on the functional, rather than numerical basis and there is no universal approach as to how to categorize Poles living abroad – each of the above mentioned countries sets its own requirements for working with Polonia. People who have Polish roots but do not speak Polish and who reside in the USA, Canada, Australia, New Zealand, Argentina, and Brazil are regarded as Polish diaspora by Warsaw. In this case, there is a need to popularize Polish informational and ideological products for Polonia in these countries in the language of the country of residence with emphasis on the economic and cultural components and projects for the study of the Polish language.

The latter bears particular importance. In Brazil, for one, there are more than a dozen Polish language courses. People who go there are provided with social benefits and all the necessary documents – student ID passes for students, work certificates for teaching staff (teachers get discounts 33% to 49% on public and rail transport in Poland, etc.), certificates of Polish schools for distance learning, etc.

Given the presence of anti-Russian sentiment in Poland’s policy, it is not surprising that Russia, the republics of the Caucasus, and countries of Central Asia are among those that Warsaw accuses of breaching the rights of ethnic minorities, including Poles, which is not true. Working with Polonia in these regions carries a clear ideological touch, as historical grievances prevail over culture and economy. By intentionally inciting conflict, concocting accusations of violating the rights of ethnic minorities,Warsaw equips itself with ideological tools to justify its aggressive Eastern policy towards Russia, Belarus, and Ukraine.

In particular, there are noticeable attempts by Warsaw to force Polish organizations in Russia to participate in anti-Russian propaganda campaigns, especially regarding retrospective assessments of Russian-Polish and Soviet-Polish relations. Polish diplomacy cites the unsuccessful Polish uprisings of the 18th-19th centuries, exiled and repressed Poles of the tsarist and Stalinist times, return of Poland’s western lands to Soviet Ukraine and Soviet Belarus following the Red Army’s Polish campaign in 1939, etc.

The Polish Institute of National Memory (PINP), being an exclusively ideological structure, is on the list of state institutions and ministries that are responsible for cooperating with Polonia. A projecttitled “The Next Stop is History” has been launched in order to promote the historical and ideological heritage of Poland. Implemented within the framework of the Polish diaspora program of the Department of National Education of PINP in several countries at once (conferences, exhibitions, symposia, film screenings, lectures, military sports games), the project has no geographical restrictions and is conducted with the participation of certified teachers.

Let us focus on some characteristic features of the Polish diaspora policy:

– the prevalence of economic aspects while establishing cooperation with ethnic Poles living in the USA, EU and South America;

– a powerful propagandistic and political emphasis and a minimal presence of  economy while dealing with Polonia in countries of the former USSR;

– abandoning tactics of interaction with Polonia which presuppose acting through Polonian organizations only and which have proved ineffective;

– coverage by social, cultural and other projects of the largest possible number of ethnic Poles, in the first place, those who are not members of diaspora organizations;

– absence of heavy vertical hierarchy in disapora organizations in favor of horizontal links and shuttle diplomacy;

– contribute to the formation of a protest and opposition-minded stratum amongst the young in countries of the former USSR (Russia, Belarus, Lithuania, Ukraine) with further placement of its representatives in local government structures, the media and other socially important projects. 

Summing up, we can say that Warsaw’s diaspora politics abroad are focused on strengthening its positions in the Western community and pursuing unilateral and controversial goals in the eastern direction. From our partner International Affairs

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