Strategic Weekly Analysis

18 May 2011 FDI Team

Vol. 2, № 17.

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From the Editor’s Desk


Dear FDI supporters,

Welcome to this week’s edition of the Strategic Weekly Analysis

FDI is to produce two new papers. The first, titled Workshop Reports, will be issued later this week. This report will be the result of four workshops, held nationally as well as in Perth, Sydney and Canberra. The report will seek to examine Chinese national objectives in the Indian Ocean region between now and 2020.

The second set of papers will be titled Associate Papers and will include reports written by FDI Associates.

This week, the Northern Australia research programme considers some of the implications of the Federal Budget for the Pilbara region, as the “engine room” driving the Australian economy. Also analysed is the recent visit to Afghanistan of Indian Prime Minister Dr Manmohan Singh.

Meanwhile, the Global Food and Water Crises research programme investigates the severe drought that continues to grip East Africa, and looks at South Korean efforts to ensure food security.  

On 11 May, FDI’s Global Food and Water Crises Research Programme had the opportunity to take part in a Canberra roundtable discussion hosted by our sister organisation, Outcomes Australia. Addressing the roundtable were two leading European scientists, Dr Michal Kravcik and Professor Wilhelm Ripl. The roundtable focussed on ways that, through better water management, Australia’s landscape can be regenerated for future generations. FDI will be considering how Australian knowledge and expertise can be used internationally to assist in alleviating global food and water crises.

This week, we are pleased to welcome Notre Dame University student Aida Mliga to our group of interns. Originally from Tanzania, Ms Mliga will add to FDI’s skill base through her work in the Global Food and Water Crises research programme.

Upcoming Strategic Analysis Papers include: Iran’s Increasing Arc of Influence, an examination from the Indian Ocean research programme of Iranian attempts to adopt a more prominent position within the region; and, from the Global Food and Water Crises research programme, a study of the future prospects for arable land, and an analysis of the future of desalination plants as a potential answer to global water crises.

I trust that you will enjoy this edition of the Strategic Weekly Analysis.

Major General John Hartley AO (Retd)

Institute Director and CEO

Future Directions International


Federal Austerity Budget Bodes Well for Pilbara Region


The Federal Government’s fiscally conservative budget recognises and supports the growing economic, demographic and political importance of Western Australia’s Pilbara region. 


Despite the economy appearing ostensibly secure, the Federal Labor Government has staked its economic credibility on a budget reminiscent of European austerity measures and aims to bring the economy back into surplus by 2013. National and international natural disasters, the soaring Australian dollar and the spectre of inflation, have driven support for the return to budget surplus.  

Last year’s hung election result has shifted Labor’s spending priorities and policy from large cities to rural areas, a phenomenon illustrated by this year’s Budget. As the “engine room” driving Australia’s success, the Pilbara can expect to substantially benefit. 

Treasurer Wayne Swan’s announcement of $1.8 billion for critical infrastructure upgrades for hospitals and health services, combined with increased investment in mental health, will increase resilience and access to services and amenities within the region. 

The Government’s $3 billion “Building Australia’s Workforce Initiative” will attempt to alleviate current and projected shortfalls in the workforce. The Pilbara, like many other “boom” areas, suffers from a severe skills shortage that is anticipated to grow over the coming decade. Treasurer Swan argues that ‘skills shortages could constrain our economic growth and mean missed opportunities for Australia’. The Pilbara region can expect a windfall from the training initiative that will seek to support apprentices, increase skilled migration and provide support for returning the long-term unemployed to work. 

The “Building Australia’s Workforce Initiative” will provide further benefits for the Pilbara by developing and raising the regional population profile. The scheme will encourage skilled migration to the Pilbara and other areas, by promoting regionally sponsored migration and fast-tracking permanent residency for the holders of Category 457 visas who have lived in rural Australia for two years. 

To complement the demographic changes for rural centres, the government will focus investment and develop policy to promote the merits of living and working in regional cities, with a focus on issues relating to sustainability. The Regional Development Australia Fund will receive $1 billion over the next six years, to finance infrastructure projects that will support critical services and amenities for the region. 

The economic, political and social profile of the Pilbara, as demonstrated by the Budget, is growing considerably in the national consciousness. The attempt by the government to break the historic “boom and bust” cycle of rapid economic expansions, will not only benefit the economic profile of the Pilbara, but allow more holistic regional development.  

Liam McHugh 

Strategic Analyst 

FDI Northern Australia and Energy Security Research Programmes

lmch[email protected]


Indian PM Singh’s Visit to Afghanistan


Indian Prime Minister Manmohan Singh’s recent visit to Afghanistan highlights New Delhi’s intention to develop an area of strategic influence immediately to the west of Pakistan. The likelihood of this strategy achieving a positive, long-term outcome is, however, questionable.


Dr Singh’s 11-13 May visit to Kabul was the first since 2005. India has been involved in Afghanistan since the war began, largely through developmental projects that are valued at $1.5 billion.  

The aim of these projects is to counter Pakistan’s influence, to gain intelligence and to maintain positive relations with the Karzai Government and other anti-Taliban forces.

Pakistan actively opposes India’s involvement. There is even speculation that the attack on the Indian Embassy in Kabul in 2008 may have had the support of Pakistan’s Inter-Services Intelligence Agency.

Nor is India likely to receive much support from the United States. The US is concerned with drawing down its commitment to Afghanistan and for that it needs continuing support from Pakistan.

While the US will continue to develop its relationship with India, in the short term at least, Washington needs Pakistan to provide logistical access to Afghanistan, to provide intelligence and to control the Taliban forces within its borders. For these reasons, Pakistan is likely to receive more attention from Washington, at least in the immediate future.

Major General John Hartley AO (Retd)

FDI Institute Director and CEO


People Flee Drought-Stricken Eastern Africa


A poor start to the 2011 rainy season for the east African countries of Ethiopia, Kenya and Somalia has heightened food insecurity in the region. According to a report released by the Consortium of British Humanitarian Agencies, hosted by Save the Children UK, over eight million people are now facing severe food and water shortages as a result of the worsening drought.


The lack of seasonal rains in eastern Africa has led to failed harvests, acute shortages and livestock deaths. The situation has also led to a marked deterioration in grazing resources and reduced livestock productivity. This, amid rising food prices, has severely compromised purchasing capacities and access to food, heightening the danger of malnutrition. In some areas of Somalia and northern Kenya, up to 30 per cent of people are suffering from acute malnutrition, double the number required to declare a humanitarian emergency.

Thousands of people are fleeing in search of food and water for both themselves and their remaining livestock. The displacement and migration of east African pastoralists is anticipated to result in increased competition for scarce resources, creating the potential for resource-based conflict in host communities already predisposed to instability. It is also having a negative effect on the education sector, as increased numbers of schoolchildren and teachers migrate in search of better conditions. 

Somalia is considered the worst affected, with the drought complicating already compromised food security in the war-torn nation. Somalia’s neighbours have been warned of the need to prepare for the possible influx of refugees from the drought and the ongoing insurgency. Cereal prices have already increased by 135 per cent in parts of southern Somalia during the year to March 2011. Water prices have increased by 300 per cent in the last two months. Relief efforts have been hampered by al-Shabaab rebels, who have refused to allow the distribution of food aid, claiming it will create dependency. 

It is estimated that 2.4 million people in Kenya are faced with the prospect of starvation and malnutrition. The Kenyan Government has already been pressed by the emergency to commit 3.9 billion shillings ($42.4 million) to drought relief. This is likely to provide assistance to 800,000 people, with aid agencies addressing the shortfall. 

In Ethiopia, serious water shortages have affected millions in the Somali and Oromia regions. Emergency water trucking has been identified as a top priority for intervention in these areas, with the effort being co-ordinated by the Office of the United Nations High Commissioner for Refugees. Two rounds of food distribution have already been initiated, prioritising drought-affected areas. 

The efforts of international aid agencies are being hampered by low donor interest. The Consortium of British Humanitarian Agencies (CBHA), has allocated £500,000 ($764,400) to intervention, but is requesting further contributions. Of the $1.378 billion needed to provide relief, only 36 per cent has been funded to date. The difficulty in motivating the international donor community’s support is thought to be the result of a historical lack of interest in countries such as Somalia, due to the insecurity caused by the long-running civil war. Yet the CBHA is warning of a looming catastrophe in the Horn of Africa unless the efforts are fully funded, with the prognosis for the 2011 rains being bleak. 

Below average rains are anticipated for the 2011 rainy season, with food security likely to deteriorate rapidly in the next six months. Rising food prices, depleted grazing resources, an expected increase in conflict and likely upsurges in livestock and waterborne diseases, look set to severely accentuate food insecurity in both the short- and long-term. 

In addition to relief measures such as water trucks, food packages and livestock support, the drought has also prompted humanitarian partners, in association with the Kenyan Government, to launch the advocacy campaign “Ending Drought Emergencies in Kenya”, focussing on best practice in drought risk interventions. It is such aid endeavours, which concentrate on preventing recurrent emergencies in the region, that may prove most efficacious to the long-term food security of eastern Africa, as the climatic factors causing the drought are unlikely to reverse in the short term. The urgency of the humanitarian situation will, however, continue to divert aid to emergency relief, and eastern Africa is likely to continue in its precarious food security situation despite the influx of relief funds. 

Prue Campbell


FDI Global Food and Water Crises Research Programme


South Korea Food Security Concerns Prompt Land Grab


Amid rising food prices and increasing demand-side pressures, South Korea is becoming increasingly aware of its vulnerability to food shocks in the coming years. As a net importer of food, South Korea is looking overseas as a means of outsourcing its struggling agricultural sector. 


South Korea currently has the lowest level of food security of any of the member nations in the Organisation of Economic Co-operation and Development. The country imports over 90 per cent of its rising food needs, including almost all of its wheat and corn. Land is relatively scarce and expensive in South Korea, with nearly 83 per cent of total land available being committed to non-agricultural use. Today, less than eight per cent of the population is employed in agriculture and South Korea has become one of the most urbanised and modern industrialised nations in the world. This rapid development has resulted in encroachment on agricultural lands; an accelerated demand for food, especially non-traditional staples such as bread, meat and dairy products; and an increased and costly focus on food quality and safety. 

In an effort to ensure its future food security, South Korea has pursued a series of policies aimed at supporting and insulating its agricultural sector. This has come in the form of high production prices supported by government purchases; high-tariffs on rice, meat and dairy imports; high production subsidies in most other sectors and non-tariff trade barriers on many commodities. However, by artificially maintaining resources in agriculture, Korea’s current agricultural policy has the potential to slow the growth rate of the entire domestic economy. Furthermore, international pressures towards free trade agreements and a dismantling of international barriers to trade, make it politically untenable for Seoul to continue to protect its agricultural sector to the same degree. South Korea has already reluctantly agreed to expose its agricultural sector to the provisions of the Uruguay Round Agreement on Agriculture, in addition to signing a free trade agreement with the United States, which is awaiting ratification. 

As a result South Korea is now looking outside its borders. It is at the forefront of the global land grab phenomenon, involving other food-insecure nations such as China, Japan, Saudi Arabia and the United Arab Emirates. The South Korean Government recently purchased more than 325,000 hectares in Mongolia, in an effort to develop another base for food production. Seoul also has an interest in substantial tracts of land in Russia, Africa and South-East Asia, as well as assisting over 60 South Korean companies engaged in international agriculture. There was even an attempt in 2008 by South Korea to secure a 99 year lease over 3.2 million acres in Madagascar, nearly half of that country’s arable land. It failed after the resignation of the then Madagascan President, Marc Ravalomanana. The potential ethical quandary about sending food overseas, while impoverished local populations starve, does not appear to have prompted restraint on the part of any of the investors looking to exploit international agricultural potential. 

Yet, despite its emphasis on self-sufficiency, South Korea is still faced with a growing reality of food insecurity. This has been a perennial concern for South Korea, especially in the context of a desire to prevent a possible “weaponisation” of food that would see its dependence on international imports

threaten its national security. South Korea also has to consider the sudden, and considerable, extra demand pressures that the food sector might be subject to in the event of reunification with the North. 

Despite the increasing urgency of South Korea’s food security situation, Seoul‘s pro-activity in future-proofing food supplies, demonstrates a degree of forethought that countries with more robust agricultural sectors, such as Australia, lack. In seeking to secure sustainable food resources for its population, South Korea is demonstrating the need for national governments to respond to a new range of policy frontiers before it is too late. 

Prue Campbell


FDI Global Food and Water Crises Research Programme




What’s Next?

  • The week-long visit to the United States of Chief of the General Staff of China’s People’s Liberation Army, General Chen Bingde, continues until 22 May.
  • New Zealand Foreign Minister Hon. Murray McCully begins an official visit to the United States today, where he is meeting with US Secretary of State Hillary Clinton and other US officials including Homeland Security Secretary Janet Napolitano. Mr McCully will also give an address titled “New Zealand and the United States: Pacific Partners” to the Centre for Strategic and International Studies in Washington, DC.
  • In what may offer clues to the outcome of the next national and provincial elections, scheduled for 2014, South African municipal elections are taking place today. 
  • Association of South-East Asian Nations (ASEAN) Defence Ministers are meeting in Jakarta from 18-21 May to discuss regional security and defence issues. Ministers from Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam will be in attendance.
  • Chinese legislator Wu Bangguo will visit Namibia, Angola, South Africa and the Maldives from 18-31 May to meet with each country’s national assembly speaker.
  • French President Nicholas Sarkozy will host His Highness General Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, at the Élysée Palace, Paris on 20 May.
  • The Second Africa-India Summit Forum will take place in Addis Ababa, Ethiopia from  20-25 May, under the theme “Enhancing Partnership, Shared Vision”. 


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



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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.
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