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Combatting EU farmland concentration and speculation

Written by Chris Chancellor

The European Commission has issued guidelines on how Member States can lawfully intervene in agricultural land markets

The issue of who owns or controls farmland in the European Union (EU) has become one  of increasing concern. Lately there has been a growing recognition that corporate farmland capture is not a problem reserved only for developing nations. Earlier this year, the European Parliament (EP) adopted an own-initiative report, revealing the way in which agricultural land is increasingly falling into the hands of a small elite.

EU legal frameworks have been shown to marginalise smaller farmers, creating concerns over the resulting dominance of industrial agribusiness; disappearing livelihoods for small-scale family producers, stagnant rural development, rural-urban migration, floundering farm succession and environmentally unsustainable agricultural practices, represent a few of the relevant issues. This has been a particularly hot issue for newer member states from Central and Eastern Europe, whose cheaper and more fertile lands, which in many cases still harbour significant peasant populations, are attracting the interest of investors from far and wide.

Many civil society groups have demanded clarity from DG FISMA (The Directorate General for Financial Stability, Financial Services and Capital Markets Union) on how Member States can act to address the above issues without violating EU law.

Bound by Fundamental Freedoms

In response, the European Commission (EC) has issued an interpretative communication on the acquisition of farmland. The document aims to set out the different options available to Member States in regulating arable land transactions.

The main barrier to restrictive national laws is the need to comply with wider EU laws, primarily those relating to the fundamental freedoms outlined in the Treaty for the Functioning of the European Union (TFEU). The main ones of relevance here are the free movement of capital, the freedom of establishment, and the principle of non-discrimination on grounds of nationality. Any Member States wishing to introduce legislation in order to protect or shape their agricultural land markets must do so in a way that does not contravene these principles. This is of course a near impossible task.

However, the jurisprudence of the Court of Justice of the European Union (CJEU) has recognised the special nature of agricultural land. There are certain policy objectives that are considered to justify intervention in farmland markets, including preventing speculation and maintaining socially and environmentally favourable distributions of land ownership. Thus, the EC document explains, measures hindering these fundamental freedoms can be taken in specific circumstances if:

– the measures are not discriminatory

– they are justified by an overriding public interest

– they comply with ‘principle of proportionality’ (they can achieve the relevant objective and there are no less restrictive options available to do so).

Options on the table

Based on the track record of the CJEU, the EC communication essentially identifies three viable options for Member States looking to control their markets for arable land:

– prior authorisation of transaction against clearly pre-defined and proportional, non-discriminatory criteria

– pre-emption rights for local farmers

– price controls to prevent ‘excessively speculative’ prices

Other options such as the obligation for the investor to farm the land themselves, prohibition on purchases by legal persons, and acquisition size caps, are all considered unlikely to pass CJEU scrutiny on grounds of disproportionality.

Just the bottom of the beanstalk

The release of these guidelines is a welcome clarification for NGOs and Member State officials worried about the pattern of increasing farmland concentration. Member States now have a more definitive framework within which to operate, and NGOs and activists have points against which to lobby their governments to take action.

However, it is unlikely to be a conclusive dictate on the matter. Concerned parties are now pouring through the document and offering their critical perspectives, with many highlighting the shortcomings of CJEU interpretations.

Regulating agricultural land transactions is set to become a much bigger political issue, not only in the context of growing nationalism across the EU, but also within the context of the food system sustainability crisis that we face today. The EC will be forced to address this in far greater depth in the coming years in order to avert major crises on both these fronts.

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Jakarta Bay reclamation project officially resurfaces

Written by Chris Chancellor

A moratorium on the controversial reclamation development off the coast of Jakarta has been lifted by the Coordinating Ministry for Maritime Affairs

Indonesia’s Coordinating Maritime Affairs Minister, Luhut Penjaitan, has officially lifted a moratorium (temporary ban) on development of the controversial Jakarta Bay reclamation project. The decision puts an end to a construction ban issued in April 2016 by the same ministry. Developers are now free to proceed with the development of the 17 artificial islands off the north Jakarta coastline.

What is the Jakarta Bay reclamation project?

The reclamation project, also known as the National Capital Integrated Coastal Development (NCICD) is an ambitious infrastructural development situated in Jakarta Bay. An array of aims is pursued under the plans, including tackling land subsidence (the sinking of land), providing coastal protection, improving water supply and sewage infrastructure and developing space for industry and real estate. Land subsidence and coastal flooding are huge problems for the city, which experiences major disruption every year due to flooding in its northern districts.

The project involves the development of a giant sea wall, behind which 17 artificial islands are being constructed through private investors. These islands will be used for a variety of purposes, ranging from heavy industry and real estate to leisure and amusement venues. The islands will be linked by a series of highways, which are also aimed at alleviating congestion issues in Jakarta’s jam-packed northern districts.

These islands are considered necessary in order to create the added value required to offset the huge cost of the project. The sale of real estate, in the form of the actual islands themselves, as well as office and apartment developments, is a major component in the project’s funding strategy.

Who’s behind the sea wall?

The NCICD is a public-private partnership initiative, primarily between the government of the Republic of Indonesia and the private sector. However, as of 2016 the project became a trilateral one, with an agreement being signed between Indonesia, the Netherlands and South Korea for cooperation on project implementation.

The Dutch have been involved since the outset, with the Dutch government providing significant financing for planning and implementation. A coalition of Dutch businesses was prominent in the planning stage, and many Dutch firms are now benefiting with contracts or tenders during the construction phase. The implementation of the project is estimated to cost up to $40 billion, with net profit hoped to amount to over $3 billion.

Fishy business

Despite its lofty goals, the project has encountered serious opposition from civil society groups and resident fisher folk populations. The fishing communities that line the northern Jakarta shoreline face a complete destruction of their fishing grounds. Many have already experienced this. As early as 2013, communities near to initial construction sites reported disastrous declines in catch, causing severe implications for immediate food and nutritional security. This in turn had repercussions for education and healthcare levels, the funding of which relied on income from fishing activities.

Opponents have become particularly embittered by the absence of prior consultation on the matter, and the non-existent or inadequate provision of compensation. These are not insignificant populations, after all, with around ten thousand people estimated to be employed in the fishing sector in Jakarta, not to mention the number of people dependent upon them. Activists accuse the governments and corporations involved of engineering private profit creation under the guise of sustainable development.

A coalition of Dutch civil society organisations has criticised the Dutch government for providing support for these investments without the same rigorous standards that would have to be applied in the Netherlands. Adequate consultation, democratic and transparent decision-making and comprehensive compensation are all aspects that have been absent from the Dutch supported project.

In addition, a number of experts challenge the extent to which the project will actually address any of the major issues it sets out to, with some even predicting increased flooding and subsistence as a result.

Moratorium no more

The lifting of the moratorium means that the developers of the various islands can restart their construction activities, although reports suggest that some had continued to operate anyway. The announcement comes despite consistent public opposition from a large civil society coalition, as well as concerns from other relevant ministries in the complex Indonesian bureaucracy.

The incoming Governor of Jakarta, Anies Baswedan, pledged a cancellation of the NCICD during his campaign, in view of popular opposition to the project. Whether he is serious or not remains to be seen. Many local fisher folk retain little optimism, having seen a revolving door of vote-seeking politicians make promises that disappeared post-election. Indeed, the Coordinating Maritime Affairs Minister Luhut Panjaitan has announced that the Governor doesn’t even have the power to make such a move, as the control over the project lies with the central government.

It remains to be seen what will become of the hugely ambitious development, but for now the constructors can officially make a return to Jakarta’s waters. Meanwhile, thousands of fisher folk must scramble to piece together a livelihood, which just like the waters that they once fished, face an ever murkier future.

Analysis & Opinion

PT Freeport deal: a background of struggle

Written by Chris Chancellor

Buried beneath troubled negotiations over the Grasberg mine, there is a background of struggle that has so far evaded the eyes of the world.

The Grasberg mine is one of the largest gold and copper deposits on the planet. Located on the Indonesian-controlled island of Papua, it is operated by an Indonesian subsidiary of US mining firm Freeport-McMoRan. This month, it seems that an extension of current permits has finally been agreed upon with the Indonesian government.

 

Despite its enormous resources, the Grasberg site is relatively unheard of internationally. This is no happy accident; international journalists have long been banned from the western half of the island of Papua, which is now composed of the Indonesian provinces of Papua and West Papua. Behind this media block lies a background of struggle intimately linked with the Grasberg mine and the region’s rich natural resource wealth.

A turbulent history

As part of the Netherlands New Guinea, West Papua (modern day Papua and West Papua) was being prepared for independence in the late 50s. It was set to become a state of its own, separate from the newly formed Indonesian nation. Yet this process was short-lived, with a convergence of powerful political interests in the early 60s conspiring to terminate West Papuan independence.

In short, Indonesia wanted the territory, which sat well with Australian and US interest in the region’s resources, as well as with the strategic geopolitical interests of the US during the Cold War. After Indonesia’s founding father, Sukarno, had initially attempted to annex the region by force, control of the territory was handed to the United Nations (UN) in 1962 as part of the New York agreement. A year later, control was transferred to Indonesia, on the condition that an ‘Act of Free Choice’ be held on whether to integrate with Indonesia or become an independent state. When it was finally held in 1969, Suharto had already risen to power in a US backed military coup. In what is now widely regarded to have been a fraudulent and doctored referendum, around one thousand carefully selected West Papuan leaders voted for integration. Many testimonies insist that votes were metaphorically cast at gunpoint, with the event locally referred to as the ‘Act of No Choice’. It is during this period that Freeport entered into negotiations with Suharto, with talks thought to have been held even prior to his rise to power.

Post-integration protests were brutally suppressed, with over 500,000 West Papuans estimated to have been killed and many more raped and tortured as part of a military crackdown on pro-independence activities across Papua. Regular reports of brutality and imprisonment of independence activists continue to this day.

It is within this wider context that the Grasberg mine sits.

 The national development veil

State justifications for the deal depict the mine as key for national development. Indeed, Freeport is one of the largest taxpayers in the country, and the new deal will see the state enjoying a greater share of the revenues. Yet this discourse holds little legitimacy with Papuans living in the vicinity of the mine, or indeed with wider Papuan society.

Firstly, the promises of the development rhetoric have not been delivered; locals have not seen the material benefits that might mute opposition and anti-mine mobilisation. By contrast, local Amungme and Kamoro tribes have been stripped of their lands and livelihoods, either directly due to development of the mine, or indirectly through pollution of soils and water systems. West Papua remains one of the poorest regions in Indonesia today and is fraught with poverty and political suppression. The Indonesian military, or regional factions of it, have retaliated against protests and acts of vandalism on the mine site with extreme and indiscriminate brutality.

More fundamentally, the mine has become a symbol of Indonesian imperialism for West Papuan activists who still demand to have a free and fair independence referendum held. The local injustices wraught by the mine are deeply intwined with wider aspirations of statehood. This makes the legitimacy of an extractive development regime run from Jakarta unattainable, even if it were to re-invest revenues with a view to achieving regional socio-economic benefits.

In addition, the inability to achieve local legitimacy points to deeper inherent problems with the national development justification, which underpins extractive projects across the globe. The mining of valuable natural resources is not only extractive literally, but also in terms of flows of wealth. Degradation is not only environmental, but in turn socio-economic and cultural. The focus on numbers rolling into state coffers veils the creation of poverty, malnutrition and social unrest, the prevention of which should surely be the end goal of state funds in the first place.

More of the same

Despite the severity and longevity of this conflict, it remains far removed from international scrutiny and thus an issue absent from the agendas of state and Freeport negotiators. Whilst some are hailing the new deal as a victory for resource sovereignty over foreign corporate power, this distinction holds little relevance in the eyes of the Papuans. Both entities extract the profits and carry them off elsewhere.

In this sense the Papuan struggle connects with the trajectory of recent anti-extractivist struggles across the globe. In Latin America for example, protests that once centred around securing national natural resource autonomy have shifted focus again in response to the siphoning off of profits by the state. The state itself has come to represent an illigitimate ‘foreign’ agent, guilty of draining indigenous territories for far-off gains.

The new deal brings the prospect of 20 additional years of gold and copper extraction under the banner of national economic development. But be it a foreign enterprise or a far-removed central government ministry in control, activities at Grasberg will continue to be fought by a people that have yet to yield in their quest for independence and autonomy from external powers.

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Indonesia agrees new Grasberg mine deal with PT Freeport

Written by Chris Chancellor

Permit extension until 2041 in the pipeline for one of largest gold and copper reserves in the world.

The Indonesian government seems to have settled negotiations with PT Freeport Indonesia over the extension of permits for exploitation of the Grasberg mine site, located in the province of Papua. The company, a subsidiary of US mining giants Freeport-McMoRan, have conducted mining operations in the area since the 1960s, when they negotiated a highly controversial deal with the dictatorial government led by President Suharto. The current deal was set to end in 2021, although it seems that an extension until 2041 has now been hammered out.

Negotiations had faltered at various stages, with contrasting information emerging from the various entities involved. At one point it appeared that an agreement was not likely at all, with Indonesia demanding that PT Freeport divest 51% of its shares to Indonesian state-owned enterprises (SOEs). However, the company has agreed to compromise due to the value it sees in underground mining operations on the site.

The willingness of corporate giants Freeport, based in Arizona, to compromise on the divestment regulation might be seen as a victory for Indonesian resource sovereignty and national development. Indeed SOEs will now enjoy a significantly larger slice of the pie. But to what extent will local peoples see the benefits?

 

The agreement comes after a lengthy dispute between the Indonesian state and the corporation over revised mining rules in the country. Amongst other new criterion, the new rules stipulate that mining companies must divest 51% of their shares to Indonesian SOEs. PT Freeport contested the new terms and demanded that the rights of their previous agreement be upheld.

The argument led to a 4 month hiatus in PT Freeport’s copper concentrate exports from the site. It is estimated that up to 10% of the work force was laid off during this period, prompting mass strikes by mine labourers and other employees.

However, the new deal, once made official, will essentially mean that two more 10 year extensions are granted. This will hand PT Freeport extraction and export rights until 2041, when it is thought the mine will be fully depleted. It is not known what will become of the the ongoing labour issue on site as a result of this agreement.