The Oakland Institute 2014 (PDF Dossier)
Walking on the West Side THE World Bank and the IMF in the Ukraine Conflict
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Grabbing the Breadbasket of Europe
The East-West competition over Ukraine involves the control of natural resources, including uranium and other minerals,
as well as geopolitical issues such as Ukraine’s membership in NATO.15 The stakes around Ukraine’s vast agricultural
sector, the world’s third largest exporter of corn and fifth largest exporter of wheat,16 constitute a critical factor that
has been often overlooked.17 With its ample fields of fertile black soil that allow for high production volumes of grains
and cereals, Ukraine is often referred to as the “breadbasket of Europe.” In the last decade, the agricultural sector has
been characterized by a growing concentration of production within very large agricultural holdings that use large-scale
intensive farming systems.18 The presence of foreign corporations in the agricultural sector and the size of agro-holdings are both growing quickly.19 In recent years, more than 1.6 million hectares (ha) have been signed over to foreign companies for agricultural purposes.20
The largest land deals involve 405,000 ha to a company listed in
Luxembourg, 444,800 ha to
Cyprus-registered investors, 120,000 ha to a
French corporation, and 250,000 ha to a
Russian company.21
China signed an agreement for 3 million ha of prime farmland in Eastern Ukraine in September 2013 but it is unclear if this deal will go forward with the change of government. According to media reports, this deal is now “disputed.”22 If it is implemented, the agreement would give China control over an area roughly the size of Belgium that accounts for 5% of all arable land in Ukraine.
23Whereas Ukraine does not allow the use of genetically modified organisms (GMOs) in agriculture,25 Article 404 of
the EU agreement, which relates to agriculture, includes a clause that has generally gone unnoticed: it indicates, among
other things, that both parties will cooperate to extend the use of biotechnologies.26 There is no doubt that this provision
meets the expectations of the agribusiness industry. As observed by Michael Cox, research director at the investment
bank Piper Jaffray, “Ukraine and, to a wider extent, Eastern Europe, are among the “most promising growth markets
for farm-equipment giant Deere, as well as seed producers Monsanto and DuPont.”27
Drastic Reforms to Attract Investment and Improve Business Rankings
In recent years, despite President
Yanukovych’s reluctance to accept the adjustment programs pushed by international
institutions, a number of reforms were introduced to improve the country’s attractiveness to foreign investment. In
2013,
Yanukovych challenged his government to score among the top 100 countries of the World Bank’s Doing Business rankings.28 Over the last year alone, Ukraine jumped 28 spots in the rankings, from 140 in 2013 to 112 in 2014.
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