Ukraine: The Corporate Annexation. For Cargill, Chevron, Monsanto, Its a Gold Mine of Profits
As the US and EU apply sanctions on Russia over its annexation of Crimea, JP Sottile reveals the corporate annexation of Ukraine. For Cargill, Chevron, Monsanto, theres a gold mine of profits to be made from agri-business and energy exploitation.
The potential here for agriculture / agribusiness is amazing production here could double Ukraines agriculture could be a real gold mine.
On 12th January 2014, a reported 50,000 pro-Western Ukrainians descended upon Kievs Independence Square to protest against the government of President Viktor Yanukovych.
Stoked in part by an attack on opposition leader Yuriy Lutsenko, the protest marked the beginning of the end of Yanukovychs four year-long government.
That same day, the Financial Times reported a major deal for US agribusiness titan Cargill.
Business confidence never faltered
Despite the turmoil within Ukrainian politics after Yanukovych rejected a major trade deal with the European Union just seven weeks earlier, Cargill was confident enough about the future to fork over $200 million to buy a stake in Ukraines UkrLandFarming.
According to the Financial Times, UkrLandFarming is the worlds eighth-largest land cultivator and second biggest egg producer. And those arent the only eggs in Cargills increasingly ample basket.
On 13th December 2013, Cargill announced the purchase of a stake in a Black Sea grain terminal at Novorossiysk on Russias Black Sea coast.
The port to the east of Russias strategically and historically important Crimean naval base gives them a major entry-point to Russian markets and adds them to the list of Big Ag companies investing in ports around the Black Sea, both in Russia and Ukraine.
Cargill has been in Ukraine for over two decades, investing in grain elevators and acquiring a major Ukrainian animal feed company in 2011. And, based on its investment in UkrLandFarming, Cargill was decidedly confident amidst the post-EU deal chaos.
Its a stark juxtaposition to the alarm bells ringing out from the US media, bellicose politicians on Capitol Hill and perplexed policymakers in the White House.
Instability what instablility?
Its even starker when compared to the anxiety expressed by Morgan Williams, President and CEO of the US-Ukraine Business Council - which, according to its website, has been Promoting US-Ukraine business relations since 1995.
Williams was interviewed by the International Business Times on March 13 and, despite Cargills demonstrated willingness to spend, he said, The instability has forced businesses to just go about their daily business and not make future plans for investment, expansion and hiring more employees.
In fact, Williams, who does double-duty as Director of Government Affairs at the private equity firm SigmaBleyzer, claimed, Business plans have been at a standstill.
Apparently, he wasnt aware of Cargills investment, which is odd given the fact that he couldve simply called Van A. Yeutter, Vice President for Corporate Affairs at Cargill, and asked him about his companys quite active business plan.
There is little doubt Williams has the phone number because Mr. Yuetter serves on the Executive Committee of the selfsame US-Ukraine Business Council. Its quite a cozy investment club, too.
According to his SigmaBleyzer profile, Williams started his work regarding Ukraine in 1992″ and has since advised American agribusinesses investing in the former Soviet Union. As an experienced fixer for Big Ag, he must be fairly friendly with the folks on the Executive Committee.
Big Ag luminaries Monsanto, Eli Lilly, Dupont, John Deere
And what a committee it is its a veritable whos who of Big Ag. Among the luminaries working tirelessly and no doubt selflessly for a better, freer Ukraine are:
- Melissa Agustin, Director, International Government Affairs & Trade for Monsanto
- Brigitte Dias Ferreira, Counsel, International Affairs for John Deere
- Steven Nadherny, Director, Institutional Relations for agriculture equipment-maker CNH Industrial
- Jeff Rowe, Regional Director for DuPont Pioneer
- John F. Steele, Director, International Affairs for Eli Lilly & Company
And, of course, Cargills Van A. Yeutter. But Cargill isnt alone in their warm feelings toward Ukraine. As Reuters reported in May 2013, Monsanto the largest seed company in the world plans to build a $140 million non-GM (genetically modified) corn seed plant in Ukraine.
And right after the decision on the EU trade deal, Jesus Madrazo, Monsantos Vice President for Corporate Engagement, reaffirmed his companys commitment to Ukraine and the importance of creating a favorable environment that encourages innovation and fosters the continued development of agriculture.
Monsantos strategy includes a little hearts and minds public relations, too. On the heels of Mr. Madrazos reaffirmation, Monsanto announced a social development program titled Grain Basket of the Future to help rural villagers in the country improve their quality of life.
The initiative will dole out grants of up to $25,000 to develop programs providing educational opportunities, community empowerment, or small business development.
Immense economic importance
The well-crafted moniker Grain Basket of the Future is telling because, once upon a time, Ukraine was known as the breadbasket of the Soviet Union. The CIA ranks Soviet-era Ukraine second only to Mother Russia as the most economically important component of the former Soviet Union.
In many ways, the farmland of Ukraine was the backbone of the USSR. Its fertile black soil generated over a quarter of the USSRs agriculture. It exported substantial quantities of food to other republics and its farms generated four times the output of the next-ranking republic.
Although Ukraines agricultural output plummeted in the first decade after the break-up of the Soviet Union, the farming sector has been growing spectacularly in recent years.
While Europe struggled to shake-off the Great Recession, Ukraines agriculture sector grew 13.7% in 2013.
Ukraines agriculture economy is hot. Russias is not. Hampered by the effects of climate change and 25 million hectares of uncultivated agricultural land, Russia lags behind its former breadbasket.
According to the Centre for Eastern Studies, Ukraines agricultural exports rose from $4.3 billion in 2005 to $17.9 billion in 2012 and, harkening the heyday of the USSR, farming currently accounts for 25% of its total exports. Ukraine is also the worlds third-largest exporter of wheat and of corn. And corn is not just food. It is also ethanol.
Feeding Europe
But people gotta eat particularly in Europe. As Frank Holmes of US Global Investors assessed in 2011, Ukraine is poised to become Europes butcher. Meat is difficult to ship, but Ukraine is perfectly located to satiate Europes hunger.
Just two days after Cargill bought into UkrLandFarming, Global Meat News reported a huge forecasted spike in all kinds of Ukrainian meat exports, with an increase of 8.1% overall and staggering 71.4% spike in pork exports.
No wonder Eli Lilly is represented on the US-Ukraine Business Councils Executive Committee. Its Elanco Animal Health unit is a major manufacturer of feed supplements.
And it is also notable that Monsantos planned seed plant is non-GMO, perhaps anticipating an emerging GMO-unfriendly European market and Europes growing appetite for organic foods. When it comes to Big Ags profitable future in Europe, the stakes couldnt be higher.
A long string of Russian losses
For Russia and its hampered farming economy, its another in a long string of losses to US encroachment from NATO expansion into Eastern Europe to US military presence to its south and onto a major shale gas development deal recently signed by Chevron in Ukraine.
So, why was Big Ag so bullish on Ukraine, even in the face of so much uncertainty and the predictable reaction by Russia?
The answer is that the seeds of Ukraines turn from Russia have been sown for the last two decades by the persistent Cold War alliance between corporations and foreign policy. Its a version of the Deep State that is usually associated with the oil and defense industries, but also exists in Americas other heavily subsidized industry agriculture.
Morgan Williams is at the nexus of Big Ags alliance with US foreign policy. To wit, SigmaBleyzer touts Mr. Williams work with various agencies of the US government, members of Congress, congressional committees, the Embassy of Ukraine to the US, international financial institutions, think tanks and other organizations on US-Ukraine business, trade, investment and economic development issues.
Freedom for US business
As President of the US-Ukraine Business Council, Williams has access to Council cohort David Kramer, President of Freedom House. Officially a non-governmental organization, it has been linked with overt and covert democracy efforts in places where the door isnt open to American interests aka US corporations.
Freedom House, the National Endowment for Democracy and National Democratic Institute helped fund and support the Ukrainian Orange Revolution in 2004. Freedom House is funded directly by the US Government, the National Endowment for Democracy and the US Department of State.
David Kramer is a former Deputy Assistant Secretary of State for European and Eurasian Affairs and, according to his Freedom House bio page, formerly a Senior Fellow at the Project for the New American Century.
Nulands $5 billion for Ukrainian democracy
That puts Kramer and, by one degree of separation, Big Ag fixer Morgan Williams in the company of PNAC co-founder Robert Kagan who, as coincidence would have it, is married to Victoria F*ck the EU Nuland, the current Assistant Secretary of State for European and Eurasian Affairs.
Interestingly enough, Ms. Nuland spoke to the US-Ukrainian Foundation last 13th December, extolling the virtues of the Euromaidan movement as the embodiment of the principles and values that are the cornerstones for all free democracies.
Nuland also told the group that the United States had invested more than $5 billion in support of Ukraines European aspirations meaning pulling Ukraine away from Russia. She made her remarks on a dais featuring a backdrop emblazoned with a Chevron logo.
Also, her colleague and phone call buddy US Ambassador to Ukraine Geoffrey Pyatt helped Chevron cook up their 50-year shale gas deal right in Russias kitchen.
Coca-Cola, Exxon-Mobil, Raytheon
Although Chevron sponsored that event, it is not listed as a supporter of the Foundation. But the Foundation does list the Coca-Cola Company, ExxonMobil and Raytheon as major sponsors. And, to close the circle of influence, the US-Ukraine Business Council is also listed as a supporter.
Which brings the story back to Big Ags fixer Morgan Williams.
Although he was glum about the current state of investment in Ukraine, hes gotta wear shades when he looks into the future. He told the International Business Times:
The potential here for agriculture / agribusiness is amazing production here could double. The world needs the food Ukraine could produce in the future. Ukraines agriculture could be a real gold mine.
Of course, his priority is to ensure that the bread of well-connected businesses gets lavishly buttered in Russias former breadbasket. And there is no better connected group of Ukraine-interested corporations than American agribusiness.
Given the extent of US official involvement in Ukrainian politics including the interesting fact that Ambassador Pyatt pledged US assistance to the new government in investigating and rooting-out corruption Cargills seemingly risky investment strategy probably wasnt that risky, after all.