Tuesday, October 12, 2010

Article: Cleo Paskal on commodities versus strategic assets (or how to win friends and influence countries -- with wheat)

Cleo Paskal analyses Canada's position as a global 'commodities' larder for the latest issue of Canadian Geographic. An excerpt (for the whole article, click here): 

Around the world, nations concerned about existing and worsening resource scarcity are making moves to secure supply. Populations facing hardship may be looking for new places to move, as refugees either after an extreme event or because of gradual erosion of stability in their home countries. And that is sure to affect the way they look at Canada.Some have been planning for scarcity for a long time. 
China’s one-child policy, implemented in 1979, followed a series of famines and was, at least in part, designed to reduce demand on resources. China’s willingness to implement such an emotionally, socially and politically difficult policy is a small indication of the seriousness with which it is also trying to secure supply. For example, along with other countries concerned about food supply, such as Saudi Arabia and South Korea, China is investing heavily in farmland in places like Africa. Often, the farms are run by Chinese nationals and the produce is destined for Chinese markets. And what scarce resources China does have, such as rare earth metals, are being kept in the country by the imposition of export quotas and high export tariffs.
The crux of it is that many of the things we currently view as commodities — say wheat and metals — are already seen as strategic assets by less fortunate nations. When something is considered a strategic asset, different economics and politics apply. A bushel of wheat isn’t viewed just as a bushel of wheat but as an essential component for keeping people from rising up against the government. During the food price spike of 2008, for instance, China was very quick to increase food subsidies to that most restive group, students. And in August, Russian Prime Minister Vladimir Putin announced a temporary ban on grain exports because of a severe drought that is expected to reduce the harvest by more than 20 million tonnes.
Canada may think of itself as a commodities nation, but others see us as a strategic-assets storehouse.
The question is, Will the Canadian government incorporate the increasing strategic value of our commodities into the way we engage with the rest of the world? Will we continue to sell off our storehouse to the spot-price highest bidder? Or will we try to plan for the longer term, develop a strategy and perhaps use our relative abundance to help allies get through the coming scarcities — in effect using our resources to increase our own security?
Parts of the Canadian government, including Public Safety Canada, have been considering these issues, and in certain sectors — in particular water — NGOs are raising strategic concerns. But we have a long way to go. What other nations already understand is that in an increasingly unstable world, Canada’s wheat, livestock, water, oil and land aren’t just commodities — they are stability. And that may soon become the rarest commodity of all.

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