Selling Sweet Nothings

By Sam Alexander

Machiavelli wrote that “politics have no relation to morals.” The same should be said for economics. From a realist perspective, the international system is composed of actors who pursue their individual self-interests at all times and cooperate with one another only when it is mutually beneficial or absolutely necessary. In order to be the most successful in their individual pursuits, actors require a common framework through which to interact with other parties. Grounding human behavior in the economy has long served as an arguably objective lens through which to explain different actions and decisions. However, in countries where the populations are largely engaged in informal or subsistence labor the value of purely economic appraisal is limited. The result has been for powerful actors to engage in a more specific framing process that allows them to incorporate these populations into the market in the first place. This new framework is popularly referred to as “development.”

Access to energy has always been a concern for industrialized nations. As awareness increases regarding the declining access to petroleum supplies, there is a “renewed interest in liquid agrofuel” or “biofuel” (Borras et al. 215). In light of the ‘peak oil’ dilemma, both the United States and the European Union have established policies mandating that fossil fuels be blended with biofuels to reduce petroleum dependencies (215). This has drastically increased the global demand for biofuel, and based on the agricultural limitations within the U.S. and Europe, “outsourcing biofuel production has become a key pillar in the emerging global agrofuel complex” (215). In the quest for new biofuel suppliers, attention has turned to “land-abundant” countries often located in Africa (Borras et al. 221). This is the backdrop behind the ProCana bioethanol project in Mozambique. There, three primary actors – Western industrialized nations (the U.S. and E.U.), corporations (ProCana), and the national government overseeing said production (the Mozambican government) – can be distinguished to have actively constructed the framework through which biofuel production is currently viewed as promising economic development.

Given the increasing demand for biofuel in Western industrialized nations, there have been two primary pushes to facilitate broader access to these resources. The first, has been to frame national economic and security needs as having transnational or global benefits rather than purely domestic ones. Western nations, corporations and development agencies have claimed that the emerging biofuel market offers a “three-win” scenario (Borras et al. 231). These three “wins” are the environmental benefits of reducing greenhouse gas emissions, the indispensable value of attaining national energy security, and the economic growth and development that will be realized by states in the global South (231). The second initiative has been to reduce the transaction costs for other actors producing and marketing biofuels by providing evidence that can support this agenda for each major actor involved. Western funded organizations such as the World Bank have helped to construct the narrative that there exists a wide availability of “marginal” or “under-utilized land in which to produce crops for biofuels” (Borras et al. 221). These two terms are “used to refer to lands that are not fully utilized in economic terms” though they may be under use in any number of other ways (221).

Wielding this narrative, “a team of consultants sponsored by the World Bank and the Embassy of Italy prepared a policy study and recommendation” for the Mozambican government “emphasizing the availability of under-utilized lands” within the country’s borders (Borras et al. 217). Third parties such as these are able to use the economic concept of marginal land as a frame through which to encourage developing nations to promote the production and trade of desired resources. The fact that these third parties are often funded by Western nations or organizations is hardly surprising considering the need to compensate the valuable service that they provide. By using “unbiased” economic evaluations of resources such as land, these third-party reports can be used to justify and frame the decisions of more powerful actors. While the benefits of this framework for Western states and corporations are more salient, the Mozambican government also profits from applying this same narrative. Herein lies the real “three-win scenario.”

As Western countries are concerned with attaining energy security through cheap and reliable access to fuel, developing nations’ governments seek to secure external sources of revenue. Their behavior is driven by the “desire to save and even generate foreign exchange earnings, as well as provide employment in their countryside” (Borras et al.228). With the focus on attracting foreign capital and investment, governments like that of Mozambique’s see larger benefits from attracting tourists and corporations than they do from allowing domestic subsistence labor. These values directly reflect the way in which Mozambique’s government allocates its country’s major resources, such as arable land. Accordingly, the ProCana plantation “was located on prime agricultural land with great potential for food production” and the original inhabitants of the land were resettled in less economically valuable locations (Borras et al. 222). In order to justify removing citizens from their lands, “the Mozambican government has framed the biofuels initiative within the context of interrelated concerns: energy, environment, land, employment, livelihoods and food, among others” (Borras et al. 220). In other words, the project’s expected benefits are framed as environmental, energy-related and, above all else, developmental.

The foreign corporations engaged in the production and marketing of biofuels most noticeably exploit the development framework. ProCana’s primary incentive, “like any capitalist venture, is [maximizing] profit” (Borras et al. 224). In pursuit of this objective, corporations utilize narratives such as the “three-win” scenario to provide national governments the tools with which to promote their corporate endeavors. The ProCana project’s primary investor, CAMEC, claimed that biofuel production would “spur and promote livelihoods and employment among the rural poor,” and the Mozambican government was able to parrot these promises on to the 360 plus families their project displaced (224). Through the development lens land is held “as one of the economic factors of production” and subsistence or traditional land use is dismissed as marginal or unproductive (Borras et al. 225). This public economic rationale is then paired with material economic incentives for government officials in order to secure preferential treatment and resource access for firms like CAMEC. The number of “kickbacks and directorships provided to President Armando Guebuza by direct foreign investors in Mozambique indicates the broad levels of corruption in the upper reaches of the state” (Borras et al. 230). These financial incentives explain some of the government’s willingness to join foreign governments and corporations in capitalizing on the rhetoric of development. These privileged actors profit despite the fact that such corporate ventures rarely “contribute in any significant way to solving the problems of poverty, inequality and socio-political exclusion of the rural poor” (Borras et al. 231). Foreign biofuel projects like ProCana aren’t even band-aid solutions. Corporations such as CAMEC are beholden to their stock-holders, not Mozambican citizens. Quickly forgetting their claims that mutual benefits would be realized, CAMEC decided to pull their investments out of both the ProCana project and the biofuel market entirely when the company’s executives determined that there were more profitable margins in Mozambican mining (Borras et al. 232).

The ProCana case is a story of mutually exploitable frameworks. Western governments and organizations recognized their need for enhanced energy security and they constructed an “unbiased” lens through which other actors could help them achieve this goal at the lowest possible cost. Corporations seek to maximize their individual profits; recognizing the demand for biofuel as an opportunity for higher earnings. Using economic development as the incentive with which to engage countries like Mozambique, these actors work to minimize their costs while still securing the necessary national government support. As under-the-table economic gains are concentrated among those in government with the highest level of decision making authority, corporations are favored over the collective citizenry. Any return on investment that results from foreign projects like ProCana is largely divided among the same three actors listed above. The power lies in the framework, and those who contribute to its construction are the most capable of capitalizing on the actors who come to participate in the narrative further down the road. Yet, those who exploit the development structure delegitimize future foreign investments. Biofuels hold tremendous potential as both an energy source and a market, but if these projects are intended to drive development as well as returns then all involved actors need to be willing to extend their time horizons and engage in longer length ventures. Short-term gains belong to day-traders on Wall Street. Development, however, should be the creation of permanent projects because they have the unique ability to produce long-term growth for all involved.

References

Borras, Saturnino M., David Fig, and Sofía Monsalve Suárez. “The Politics of Agrofuels and Mega-Land and Water Deals: Insights from the ProCana Case, Mozambique.” Review of African Political Economy 38.128 (2011): 215-234. JSTOR. Web. 21 Apr. 2014.

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