From the Editor’s Desk - Future Directions...

18 January 2011 | Vol. 2, № 1.

From the Editor’s Desk

Dear FDI supporters,

Welcome to the first Strategic Weekly

Analysis of 2011. In this week’s edition, the

Northern Australia/Energy Security

research programme reports on the

unveiling of the National Ports Strategy,

Australia’s first-ever nationally

co-ordinated approach to shipping.

The Global Food and Water Crises research

programme investigates the efforts being

made by the former Soviet republic of

Georgia to lure South African farmers to

the country in a bid to improve its food

security, and looks into the riots breaking

out around the globe in the wake of higher

food prices.

Meanwhile, the Indian Ocean research

programme considers the recent

independence referendum in Southern

Sudan and the future of the country’s oil

revenues, a key issue which will need to be

addressed in the event that Africa’s largest

country is split in two.

Upcoming Strategic Analysis Papers include

a report on illegal fishing in the western

Indian Ocean, an investigation into food

security and the phenomenon of global

land acquisitions and an analysis of

competing demands for water in the

Mekong River basin.

Major General John Hartley AO (Retd)

Institute Director and CEO

Future Directions International

*****

Australia Receives its First National Ports Strategy

Background

An island trading nation, Australia is dependent on shipping for its economic survival. Currently, 99

per cent of the nation’s exports, by volume, travel through its ports and along the Sea Lines of

Communication (SLOCs) to international markets. To address the national significance of ports to

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Australia’s economy, and provide the first-ever nationally co-ordinated approach to shipping, the

Australian Government has released its National Ports Strategy.

Comment

In response to Australia’s global supply lines, and their intrinsically entwined relationship with

shipping and SLOCs, the Australia Government has released the nation’s first National Ports Strategy.

At the launch of the National Ports Strategy on 7 January 2011, Prime Minister Julia Gillard and

Infrastructure and Transport Minister Anthony Albanese stated that the strategy had been developed

to ‘enhance the performance of Australia's ports, increasing national productivity and economic

growth’.

Both stressed the need to ensure that the nation’s ports are sufficiently upgraded to increase

productivity and address the issue of lost revenue caused by, but not limited to, lack of existing port

capacity and reducing transport bottlenecks. The strategy also seeks to assist in servicing rail and

road transport corridors to ports and address demand pressures from regional booms, such as that

from the resources sector. Consultation with the States is integral for this strategy to be effective,

especially in regard to urban planning and the creation of buffer zones around ports, as well as

housing policies which allow for transport corridors to ports.

The emphasis placed on the critical role played by the nation’s ports is due in large part to the

forecast from the Australian Competition and Consumer Commission that ‘the volume of trade

moving through our biggest ports is expected to triple over the next 20 years’.

Approximately ten percent of the world's sea trade currently travels through Australian ports.

The establishment of a national strategy is long overdue. According to the Australian Government, it

has had, until 2011, ‘almost no role in the jurisdiction of ports, or management of the land around

them.’ Instead, the responsibility for these international trade gateways has been left to the

jurisdiction of State, Territory and even local governments. When it came to ports, the Federal

Government’s historical, and ongoing, role ‘has been mostly confined to defence, quarantine and

border security.’

In regard to Australia’s role in exporting food to the world, Mr Albanese noted that, ‘far more leaves

our shores than comes in. In fact National Farmers’ Federation figures show that Australia feeds 60

million people every day and is responsible for one percent of all food consumed in the world.’

Australia’s exports of agricultural products amounts to approximately $32 billion annually. It is the

nations’ ports and SLOCs which deliver these exports to international markets.

The devastation wrought by the recent Queensland floods, and to a lesser degree, the Gascoyne

floods in Western Australia, means there will be a major impact on the quantity of food exported,

which will translate to a hit on Australia’s economic bottom line.

In an article published in The Australian on the day of the Federal announcement, Mr Albanese wrote

that ‘since the establishment of that first port almost 223 years ago, 42 major ports have grown

around Australia’s coastline to service the needs of our mining, manufacturing and primary

production sectors.’

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The Minister also added that of Australia’s 42 major ports, ‘20 carry more than 90 per cent of our

shipping trade and this is expected to grow dramatically.’

Minister Albanese has been at pains to allay any community fears about the government’s approach.

‘Our National Ports Strategy is not a federal takeover. It will not be a one size fits all approach. And it

will not create new bureaucratic hurdles for the commercial sector,’ he said.

‘We are working hand-in-hand with the States and industry throughout this process.’

While the Minister claims that the National Ports Strategy ‘complements Australia’s largest ever

nation building programme’, there will be some concerns about the level of infrastructure funding

available over the next decade, especially in light of the aftermath from the Global Financial Crisis

(GFC) and the devastating Queensland floods.

According to Mr Albanese, public investment in the nation’s infrastructure fell by almost 20 per cent

during the period 1996-2007. With the establishment of Infrastructure Australia in mid-2008, that

authority was tasked with identifying almost $8 billion worth of nationally significant infrastructure

projects that the Federal Government should fund. The GFC-inspired stimulus spending package has

been considered by some to have put a brake on the relative effectiveness of Infrastructure Australia

to deliver what it had been tasked with.

The Australian Government did commission Infrastructure Australia and the National Transport

Commission to develop the National Port Strategy. At present, the strategy and its accompanying 42

recommendations will now be submitted to the Council of Australian Governments (COAG) for their

endorsement. COAG is next scheduled to meet on 14 February 2011.

Gavin Briggs

Manager

Northern Australia and Energy Security Research Programmes

[email protected]

*****

Australia Missing in Action as Nations Entice South African Farmers

Background

South African farmers, concerned with land reforms, political stablity and severe water shortages in

their country are being lured to operate farms in other countries.It is estimated that thousands of

white South African farmers have already left the country with many more expected to follow.

Comment

South African farmers are highly sought after by agricultural companies throughout Africa to

reinvigorate agricultural production. Yet, arguably the most compelling sales-pitch in recent months

has come from the Georgian Government. The former Soviet republic, nestled above Turkey on the

Black Sea, is actively trying to move away from the system of farming that is a hangover from

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communist days, and believes South African farmers may provide the solution. For South African

farmers the timing could not be better, as the South African Government showns signs of adopting

the very same farming practices that Georgia is trying to escape.

The Georgian Government has developed a new website, called ‘SA Farmers in Georgia’, which

provides information on security, land, climate and taxes as well as a simple application form

directed to the president of Georgia where farmers can ask for help in finding land and can seek

Georgian citizenship. The site also shows were in Georgia land is available. All that is required is for

the farmer to pick and choose from the estimated three million hectares of viable agricultural land

up for grabs.

Regular tours are organised in

Georgia for South African

farmers and a memorandum of

understanding has been signed

between the Government of

Georgia and the Transvaal

Agricultural Union of South

Africa which includes identifying

possible implementaion of South

African agricultural skills in

Georgia. Already South Africa is

providing advice to Georgia’s

Source: Frontera Resources government in a bid to improve

food security in the country which currently imports about 70 per cent of its food. Georgia’s

agricultural capacity and expertise were said to be ruined during the Soviet era. One commentator

believes importing these skills may make Georgia an agricultural world leader.

Besides Georgia, more than 20 African countries have invited South African farmers to lease land.

Recently around 800 South African farmers started operating in Mozambique. An estimated 1,500

South African farmers are now based throughout Africa. A further 4,000 others have moved to

Canada, Australia, the Middle East and South America. At least another 3,000 farmers have been

killed in their homeland since the end of apartheid.

The outflow from South Africa will have a significant affect on that country’s ongoing food security.

Strangely, as South Africa lets its competent farmers go, Australia will need to play an increasing role

in educating the new farmers.

South Africa’s loss can be very much Australia’s one-time-in-a-generation gain. Such opportunities do

not come along often and could cement Australia’s place as a global leader in agriculture. While

concerted efforts have been made by others around the globe to entice South African farmers, on

the surface, it appears little is being done by Australia.

Yet it is still not too late for Australia. Approximately 40,000 white farmers still remain in South

Africa.

Australia would do well to learn from the Georgians. The expertise of South African farmers, along

with their funds, would provide significant gains across the Australian agricultural sector, including

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the wineries of south-western Australia. Large tracts of land in the Kimberley, around the Ord River,

for example, as well as the Northern Territory, could be developed with the assistance of these

enterprising farmers.

Gary Kleyn

Manager

Global Food and Water Crises Research Programme

[email protected]

- Suggested futher reading: http://www.boers.ge

*****

Food Price Rises Lead to New Year Civil Unrest

Background

Riots are breaking out across the globe, caused in part by rising food prices, reminiscent of the 2008

food riots. Riots have been occurring in India, Algeria, and Tunisia and threaten to break out in other

parts of the Middle East and Northern Africa. As a result of massive flooding, Australia also faces a

food crisis of its own, which is likely to see prices of food rise.

Comment

The Food and Agricultural Organization (FAO) of the United

Nations Food Price Index slightly surpassed the 2008 price

peak in December 2010 and indications are that food prices

will continue to rise in 2011. The FAO reports that the

indices of sugar and oils and fats increased the most. In Asia,

domestic prices for rice strengthened at record levels in

several countries. Prices of wheat and wheat flour in

importing countries of Asia, Latin America and Africa

remained at high levels. The Cereal Price Index alone rose six

per cent from November to December and almost 40 per

cent from December 2009.

Rains and floods in Australia have destroyed large portions

of the crops and caused logistical problems for exports.

Russia has suffered from drought and the United States has

Source: FAO also had dry conditions. Indonesia’s crops are also failing

because of excessive rains, raising food fears in that country. Rice prices have increased over the past

year but in January declined slightly as the 2010 rice harvest came through in Asia.

As the riots have demonstrated, governments will need to play a more active role in food security in

2011 in order to maintain power and the support of their people. This is no less the case in Australia

where floods will lead to higher food prices and logistical challenges for Australian governments.

Gary Kleyn

Manager

Global Food and Water Crises Research Programme

[email protected]

Independence Likely Outcome of Southern Sudan Referendum

Background

Counting is well underway in the Southern Sudan independence referendum, with initial estimates

predicting a resounding ‘yes’ vote to partition Africa’s largest country. Barring appeals, the final

result should be known by 14 February 2011. An actual split would formally take place on 9 July. In

the event of a ‘yes’ vote, an approximately six

process of resolving a number of key issues between north and south. Chief among them will be

access to the north’s energy pipelines for the south’s oil reserves.

Comment

The independence referendum, held

between 9-15 January, was the

outcome of a 2005 United States’

brokered peace agreement, which

ended a 22-year long civil war between

the largely Muslim north and the

south, where residents are

predominantly Christian or traditional

animists.

To succeed, the referendum require

turnout of at least 60 per cent of

Southern Sudanese voters. The

condition was reportedly met with

turnouts of 83 and 53 per cent in the

south and north, respectively.

Southern Sudanese voters residing

around the world, including in

Australia, were also eligible to vote.

According to results published on the

Government of Southern Sudan website from 15 polling stations across

the ‘yes’ vote ranged from 88 per cent to

In the widely expected event of secession, key stumbling blocks will be the division of oil revenues

and access to oil pipelines and terminals. The Sudanese oil industry has pumped large amounts of

cash into the country in recent years, but most of that revenue has remained in Khartoum, the

north’s capital. While the vast majority of the oil produced

nd Water Crises Research Programme

[email protected]

*****



sounding ‘yes’ vote to partition Africa’s largest country. Barring appeals, the final


the event of a ‘yes’ vote, an approximately six-month transition period will help in the difficult


access to the north’s energy pipelines for the south’s oil reserves.

The independence referendum, held

was the

outcome of a 2005 United States’

brokered peace agreement, which

year long civil war between

the largely Muslim north and the

south, where residents are

predominantly Christian or traditional

To succeed, the referendum requires a

turnout of at least 60 per cent of

Southern Sudanese voters. The

condition was reportedly met with

turnouts of 83 and 53 per cent in the

south and north, respectively.

Southern Sudanese voters residing

around the world, including in

o eligible to vote.

According to results published on the Source: BBC News Africa/Drilling Info International

Government of Southern Sudan website from 15 polling stations across the southern capital, Juba,

the ‘yes’ vote ranged from 88 per cent to an astounding 99 per cent.




north’s capital. While the vast majority of the oil produced – estimated to be as much as 80 per cent

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sounding ‘yes’ vote to partition Africa’s largest country. Barring appeals, the final


d will help in the difficult


/Drilling Info International

the southern capital, Juba,

an astounding 99 per cent.




estimated to be as much as 80 per cent

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– comes from the south, it must travel across the country to the northern Red Sea port of Port Sudan

for export.

As indicated in the Strategic Weekly Analysis of 21 September 2010 (‘Ambitious Plans for New

Kenyan Port’), the proposed port development at Lamu could offer a means for the south to

by-pass the north and deprive it of a potential chokehold over the southern economy.

If the north will miss the oil revenue, the south will be depending on it to finance its development.

Southern Sudan will be an extremely poor country. Even compared to the north, key indicators in the

south, such as health, education, sanitation and food security are among the lowest in the world.

China is heavily involved in the Sudanese oil industry. The China National Petroleum Corporation is

the largest oil company operating in Sudan and will be keen to maintain that status if the south

secedes.

The violence-plagued region of Abyei, home to oil deposits and which straddles the north-south

divide, will hold a separate referendum to determine which side it will join.

The troubled Darfur region will not be affected by the vote. Regardless of the outcome, it will remain

part of northern Sudan.

Leighton G. Luke

Manager

Indian Ocean Research Programme

[email protected]

*****

What’s Next?

• Foreign Minister Kevin Rudd and Defence Minister Stephen Smith are hosting their UK

counterparts, Foreign Secretary William Hague and Defence Secretary Liam Fox, at the

third Australia-United Kingdom Ministerial (AUKMIN III) today in Sydney at HMAS

Watson.

• The second Arab Economic and Social Development Summit will in take place in Sharm

el-Sheikh, Egypt on 19 January.

• The WA branch of the Australian Institute of International Affairs is holding a lunch with

John Dauth, the High Commissioner to the United Kingdom. It will be held at the Library,

St George’s College, UWA on 20 January 2011 at 12.30pm. For more information e-mail:

[email protected].

• South African President Jacob Zuma will host Ugandan President Yoweri Museveni for a

two-day state visit to Pretoria and KwaZulu-Natal on 21-22 January.

• French Foreign and European Affairs Minister Michèle Alliot-Marie will begin a visit to

the Middle East on 22 January. She will have discussions with Egyptian, Israeli,

Palestinian and Jordanian leaders.

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Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future

Directions International.

Published by Future Directions International Pty Ltd.

Desborough House, Suite 2, 1161 Hay Street, West Perth WA 6005 Australia.

Tel: +61 8 9486 1046 Fax: +61 8 9486 4000

E-mail: [email protected] Web: www.futuredirections.org.au

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