Land Grabbing in South America: Fueling Displacement and Inequality

Mackenzie Blog Pic

Photo of a woman in rural Paraguay, as part of a series of photographs that reflect the challenges and dignity of the rural poor being displaced at the hands of an agricultural export model. By Flickr user Ministerio de Cultura de la Nación Argentina under an Attribution-ShareAlike 2.0 Generic license.

By MacKenzie Hammond

As the global population continues to rise, land and other natural resources will only grow in importance. Foreign companies have taken advantage of cheap lands and corrupt governance in Latin America, Southeast Asia, and Africa to expand their operations. Worse yet, more than 60 percent of those crops are exported, often leading to rural displacement and food insecurity in developing countries. ‘Land grabbing,’ was first defined in the Tirana Declaration in 2011 as an acquisition of land that violates human rights, dictates unfair contracts, disregards impact on social, economic, or environmental conditions and ultimately causes rural farmers to lose their way of life. Land is packaged and sold to multinational corporations which uproot families and take land away from indigenous populations and the rural inhabitants without offering alternative options for employment.

Foreign investors, such as multinational corporations, promote their commitment to add value to the national economy of countries they invest. Although selling land to foreign investors can increase agricultural exports and contribute to overall economic growth, it does not always translate into economic inclusion for local land owners. Wealth does not trickle down from multi-national corporations to benefit local impoverished populations because increased mechanization reduces labor costs and agricultural employment opportunities. Throughout history, land ownership has been a key determinant of power and wealth. Today, land ownership continues to favor wealthy stakeholders and frequently disadvantages low-income communities. This article analyzes the impact of land acquisition in rural communities of South America and, specifically, the current initiatives in place to improve the livelihoods of impacted populations in Paraguay.

El Gran Chaco is a region in South America that extends across Paraguay, Argentina, Bolivia, and Brazil. The basin has been a focus of foreign investments in the last few decades because of low land and production costs, loose environmental regulations, and high returns. Land is easily acquired in these countries by foreigner’s due to weak land governance and an unequal distribution of resources. Some unenforced policy environments have enabled opportunities for exploitation. One intention of channeling foreign direct investment (FDI) into developing countries is to promote integration into an increasingly globalized market. Developing countries should export common commodities like soybeans, palm oil, and beef to new markets. For example, soybean exports from Argentina, Brazil, and Paraguay combined in 2016 were worth $24.3 billion and accounted for nearly 47 percent of the world’s total soybean exports.

The international demand for products, such as soybeans, and the required land-intensive processes have created extensive problems for the local populations excluded from participation in the global economy. These include increased urbanization and poverty, loss of economic opportunity, and negative environmental and health impacts. Many efforts are tackling the symptoms of the problem, but more attention should address the root cause of the problem – land ownership.

In recent years, local unrest has prompted governmental action in Brazil and Argentina to limit land grabbing. Argentina enacted a land acquisition act in 2011 which limited foreign land ownership to 1,000 hectares. Additionally, Argentina and Brazil have a tax on soybean exports, which puts a burden on producers, but supports the local economy. Argentina recently increased this tax to 50 percent, which has the potential to drive out producers. Through these actions, governments are taking a stance against foreign abuse on the resources and people of these countries.

While countries such as Brazil and Argentina are taking intentional actions to alleviate the issue, others are not taking the effective steps to protect the local populations or land. Paraguay, for example, lacks thorough restrictions on foreign investments for commodities like soybeans and struggles to properly enforce current laws that protect rural populations.

Case Study: Paraguay and the Soybean Monocrop

Paraguay has one of the most unequal land distributions in the world. Nearly 80 percent of agricultural land is held by only 1.6 percent of landowners. Former President Alfredo Stroessner sold or gave away 25 percent of Paraguay’s fertile land during his 35-year dictatorship. Over the years, wealthy land owners have sold their land to large private investors. Companies like Louis Dreyfus or Monsanto are among the many investors who purchase land in Paraguay because of its low valuations, tax incentives, and comparatively good agroecological potential. Since the 1990s, most of these investments have contributed to the expansion of soybean plantations. 75 percent of all arable land in Paraguay is dedicated to soybean plantations. Of these plantations, over 96 percent of soybeans cultivated in Paraguay are exported, primarily to Russia, the European Union (EU), and Turkey, where it is then used primarily for animal feed.

The versatility of soybeans makes it an attractive crop to produce, yet sharing the benefits of this industry has remained a challenge for Paraguay. Rural inhabitants who are uprooted from their land do not benefit from soy exports because soybean plantations increasingly use mechanized processes instead of physical labor. Rural populations not only lose their land but are left without a job to support their families. The expansion of soybeans has forced nearly 9,000 Paraguayan families each year to migrate to the cities in search of work and a better livelihood.

These displaced individuals need a plan for integration into the local economy, whether they have migrated to urban settings or attempted to stay in their rural environments. For example, the World Bank developed a strategy for Paraguay that aimed to improve financial inclusion, increase access to basic services for impoverished communities, and foster market integration for smallholder farmers. The country partnership strategy will be ending in 2018, and the World Bank has not released a progress report on the impact of this strategy yet.

In addition to multilateral organizations – human rights groups, local NGOs, and campaigns are helping attract attention to this immediate concern and provoke a response from the government. Organizations such as the Global Forest Coalition and Friends of the Earth are providing land-use planning methods, legal advice and training for farmers, and human rights interventions to protect the land and freedom of rural inhabitants. Others, like the International Fund for Agricultural Development (IFAD), aim to increase rural capacity in municipalities and organizations. Local government and civil society organizations (CSOs) can strengthen and empower small farmers through facilitated dialogue between affected citizens and government, community protection programs, and cooperation agreements.

Other development organizations in Paraguay link rural farmers to markets through partnerships with the private sector. This way, smallholder farmers are reintegrated into the supply chain of agricultural exports. Despite these efforts for economic integration in Paraguay, these challenges are deeply rooted in structural and political capacity issues that will require institutional actions to improve regulatory frameworks and laws that protect land owners and help those that have already been displaced.

Conclusion

The land management crisis extends beyond Paraguay and El Chaco, beyond soybeans and indigenous populations; more international attention should be given to the situation in Paraguay and in countries around the world where land and wealth divide populations, cause conflict, and destroy livelihoods. Land grabbing will continue to increase urban density and stretch resources, housing, and jobs; youth populations will have higher aspirations than what those jobs can provide; food demand will increase as populations do and agricultural production will struggle to fulfill it. These consequences will intensify if the root of this problem is not addressed proactively. Preventing future land grabs will require an integrated stakeholder response to secure effective and sustainable resource distribution, environmental and human rights protections, and government accountability and transparency.

Remittances: A Complement to International Aid

By Rohit Sudarshan

The future of traditional foreign assistance is in a precarious situation. Over the past five years, Organization for Economic Co-operation and Development (OECD) countries that contribute the largest share of international aid—namely Australia, France, and the U.S.—have seen a downward trend in official development assistance (ODA) as a percentage of gross national income (GNI). Additionally, the United Kingdom’s development agency, DFID, is currently handling a surge of fraud investigations regarding their foreign aid. Countries that are global leaders must promote other financial means for international development. Few options are as important and efficient as remittances.

Remittances are payments made by immigrants to families and friends in their country of origin and represent an effective method for those in developing countries to continue to improve their standard of living. While ODA requires the coordination of government agencies as well as policymakers from many countries, remittances do not face that same constraint. The difficulty in ensuring accountability has meant that governments have misused and absorbed aid money. For these reasons, remittances can be an appealing alternative; they can move expediently and directly to a recipient that needs it.

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Hawala: An International Development Tool?

By Catarina Santos

Introduction

Roughly 38 percent of the two billion people in the world’s lowest economic percentile do not have bank accounts and therefore lack access to the global financial market.  Hawala, or “transfer” in Arabic, is a remittance system that runs parallel to formal financial system transactions. Although it is often associated with financing terrorist activities, narcotics trafficking and tax evasion, and is therefore illegal in most countries, hawala can be an important tool to facilitate the sending of remittances. This is especially the case for poorer populations in developing countries and for transactions by undocumented people. In fact, remittances received through hawala account for a third of Somalia’s gross domestic product (GDP).

Despite its ubiquity in many parts of the world, hawala remains under the radar. This article provides a background on how hawala functions, discusses why it can be an attractive alternative remittance system, and considers whether hawala should be regulated as a security threat or promoted as a development tool.

Background on hawala and how it works

Hawala started in South Asia around the 18th century, before Western banking practices reached the region. It evolved over the years and today is used mostly by migrant workers overseas for financial transactions domestically and internationally. This system distinguishes itself from the traditional remittance systems because it is largely based on trust and uses family connections and affiliations within communities to circulate money between “hawaladars,” or hawala dealers.

Why would migrants prefer to use this system over an official banking system? The main reasons are cost effectiveness, efficiency, reliability, lack of bureaucracy, and tax evasion. This system does not require identification documents or formal bank accounts, and does not leave a paper trail.  Users of this method are therefore often associated with undocumented people and people committing illegal activities.

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Creating Public-Private-Military Partnerships to Fill Administrative and Financial Gaps in U.S. Infrastructure Reconstruction Projects in Afghanistan

By Jackson Celestin 

On March 11, 2016, the Special Inspector General for Afghanistan Reconstruction (SIGAR) John F. Sopko released a report reviewing 45 Department of Defense (DOD) reconstruction projects in Afghanistan. Of the 45 projects, 28 did not meet structural contract requirements or technical specifications, 16 were structurally deficient to the point that they were considered unsafe for use, and 7 of the 15 completed projects had never been used. According to Sopko, the projects suffered from inadequate contractors, project management and oversight; and faulty building materials. To limit deficient projects, Sopko suggested the DOD improve its project planning and design procedures, hire contractors who are qualified and capable of complying with construction requirements, and conduct adequate oversight to guarantee that projects are built to protocol and contractors are held accountable

 Though Sopko’s recommendations are reasonable solutions, they ignore larger trends visible in the U.S.’ reconstruction budget in Afghanistan. Of the $114.92 billion the U.S. has spent since 2002 through the Afghanistan Reconstruction Fund, the DOD has dedicated $10.68 billion (9 percent) to Operations and Oversight and only $990 million (less than 1 percent) to the main infrastructure fund, the Afghanistan Infrastructure Fund (AIF).

Between Sopko’s report and the allocation of U.S. reconstruction funds in Afghanistan, there appears to be an expertise, administration, and funding gap that is preventing the United States from establishing sustainable infrastructure projects in Afghanistan. In the field of international development, this is a common challenge, and more agencies are turning to public-private partnerships (PPPs) to address it. Inspired by PPPs in international development, this blog presents a new model that partners the public and private sectors with the military. This article will refer to this model as Public-Private-Military Partnerships (PPMPs). Though they may face challenges in attracting private investors, working with low starting budgets, and addressing anti-Western and anti-military perceptions, PPMPs can combine the groups’ comparative advantages to fill the knowledge and funding gap in the United States’ Afghanistan reconstruction projects. They can also further connect the military to global development for better military assistance in conflict areas and help conflict and post-conflict areas to pursue global development and sustainability goals.

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This graph is an original creation of the author, Jackson Celestin, based on data from the July 30, 2016 SIGAR Quarterly Report to Congress.

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Buy Social: A New Way for International Organizations to Create Social Impact

By Waka Itagaki

Introduction

International organizations such as the United Nations (UN) and the World Bank have significant purchasing power. In 2014, the UN purchased $17.2 billion in their procurement process. Despite this purchasing power, international organizations have arguably not made the most of it to generate social impact across the world. “Buy Social,” a procurement process that seeks not only economic value but also social and/or environmental impact, has the potential to be transformative. This article highlights the benefits and challenges of Buy Social compared to “Socially Responsible Procurement,” and recommends that international organizations implement Buy Social.

Background

There is no widely agreed term to describe this kind of socially conscious procurement. This article uses “Buy Social” but other names include “Social Procurement,” “Socially Impactful Procurement,” “Social Impact Purchasing,” “Social Purchasing,” and “Socially Impactful Purchasing.” It is important to note that Buy Social is different from Socially Responsible Procurement, which is already implemented by international organizations.

Socially Responsible Procurement applies negative or positive screens to bidders by using a “do no harm” approach. For example, the UN buys from companies that meet labor standards of the International Labour Organization (ILO). Socially responsible procurement typically only considers if a bidder is a business with social consideration, and does not measure the outcomes.

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