Norman Borlaug Passes Away

The AP reports the Nobel laureate agricultural scientist and Texas A&M professor's passing at the age of 95. Borlaug remained active in the field until recently. I recall reading this Wall Street Journal article seven years ago, about his work in Africa at the time. From that article, this African's prayer came to mind when I read that Borlaug had passed away:

His successes have made the white-haired Iowan a household name in parts of Africa. "He's our hero," says Mr. Boateng, the secretary of the Fufuo Growers Association, who fondly recalls Dr. Borlaug sitting with the villagers and husking corn. "Every time we pray, we pray for Dr. Borlaug: 'Lord, we know he's elderly. Please extend his life.'"

R.I.P.

An African Perspective on Economic Development

From an op/ed in Friday's Financial Times by Paul Kagame, the president of Rwanda ("Africa has to find its own road to prosperity"):

[A]s I tell our people, nobody owes Rwandans anything. Why should anyone in Rwanda feel comfortable that taxpayers in other countries are contributing money for our well­being or development? Rwanda is a nation with high goals and a sense of purpose. We are attempting to increase our gross domestic product by seven times over a generation, which increases per capita incomes fourfold. This will create the basis for further innovation and foster trust, civic-mindedness and tolerance, strengthening our society.

[...]

Entrepreneurship is the surest way for a nation to meet these goals. Government activities should focus on supporting entrepreneurship not just to meet these new goals, but because it unlocks people’s minds, fosters innovation and enables people to exercise their talents. If people are shielded from the forces of competition, it is like saying they are disabled.

Entrepreneurship gives people the feeling that they are valued and have meaning, that they are as capable, as competent and as gifted as anyone else.

The rest of Mr. Kagame's column is worth reading. In it, he refers to the ideas of an economist we've mentioned here before, Dambisa Moyo.

A quick check of Wikipedia suggests that Kagame had a long, eventful (and somewhat controversial) military career before entering politics. This year, Kagame was included in Time Magazine's list of the world's 100 most influential people. His entry was authored by the mega church pastor Rick Warren, who wrote (in part),

Kagame's leadership has a number of uncommon characteristics. One is his willingness to listen to and learn from those who oppose him. When journalist Stephen Kinzer was writing a biography of Kagame, the President gave him a list of his critics and suggested that Kinzer could discover what he was really like by interviewing them. Only a humble yet confident leader would do that. Then there is Kagame's zero tolerance for corruption. Rwanda is one of the few countries where I've never been asked for a bribe. Any government worker caught engaging in corruption is publicly exposed and dealt with. That is a model for the entire country — and the rest of the world too.

The photo above, of President Kagame shaking hands with President Bush in the White House in 2006, is from Wikipedia.

Daewoo's Madagascar Deal Nixed

In a post last fall ("An Unprecedented Investment in Food Security"), we noted the report by the Financial Times that the Korean conglomerate had leased half the arable land on Madagascar for industrial farming. Yesterday, the Financial Times reported that that deal has been nixed ("Madagascar scraps Daewoo farm deal"). Excerpt:

South Korea’s project to transform Madagascar into its breadbasket, branded by some as neo-colonial, came to an abrupt end on Wednesday when the Indian Ocean island’s new president said he would shelve the plan.

Daewoo Logistic’s deal to lease a huge tract of farmland, half the size of Belgium, to grow food crops to send back to Seoul was a source of popular resentment that contributed to the fall of Marc Ravalomanana, the former president.

Andry Rajoelina, who was declared president by the military and constitutional court after months of demonstrations and who will be formally sworn in on Saturday, said that Daewoo’s plan was “cancelled”.

More on Moyo

In a post last month ("An African Economist on Western Aid to Africa"), we mentioned the Zambian-born economist and author Dambisa Moyo, and posted an excerpt from the interview with her in the Financial Times. Today's New York Times Magazine features an interview with Moyo as well ("Questions for Dambisa Moyo -- The Anti-Bono"). From the interview:

Q: As a native of Zambia with advanced degrees in public policy and economics from Harvard and Oxford, you are about to publish an attack on Western aid to Africa and its recent glamorization by celebrities. ‘‘Dead Aid,’’ as your book is called, is particularly hard on rock stars. Have you met Bono?
I have, yes, at the World Economic Forum in Davos, Switzerland, last year. It was at a party to raise money for Africans, and there were no Africans in the room, except for me.

[...]

You argue in your book that Western aid to Africa has not only perpetuated poverty but also worsened it, and you are perhaps the first African to request in book form that all development aid be halted within five years.
Think about it this way — China has 1.3 billion people, only 300 million of whom live like us, if you will, with Western living standards. There are a billion Chinese who are living in substandard conditions. Do you know anybody who feels sorry for China? Nobody.

Maybe that’s because they have so much money that we here in the U.S. are begging the Chinese for loans.
Forty years ago, China was poorer than many African countries. Yes, they have money today, but where did that money come from? They built that, they worked very hard to create a situation where they are not dependent on aid.

The photo above, of Ms. Mayo, accompanied Deborah Solomon's interview.

An African Economist on Western Aid to Africa

In a recent post ("The UN High Commissioner of Refugees Imitates The Onion"), we mentioned the NYU development economist William Easterly, who has been critical of traditional Western approaches to providing aid to Africa and other parts of the developing world. Coincidentally, today's Lunch with the FT interview in the Financial Times is with a Zambian-born economist, Dambisa Moyo, who seems to share Easterly's disdain of traditional aid approaches ("Lunch with the FT: Dambisa Moyo"). In fact, Moyo says that African countries would be better off if they were given a warning that foreign aid would be cut off in five years, and were forced to seek funds from the bond market instead. Moyo argues that bond investors would impose a discipline on African governments that aid donors so far haven't. Herewith, a few brief excerpts:

[A]s the historian Niall Ferguson (a contributing editor to the FT), notes in a foreword to Moyo’s book, she is venturing into a debate that has to date been colonised by white men – be they rock stars such as Bono, politicians such as Tony Blair or the academics Jeffrey Sachs and Bill Easterly.

[...]

So what of the rock and Hollywood stars, who have appointed themselves advocates of making poverty history? She is withering: “Most Brits would be irritated if Michael Jackson started offering advice on how to resolve the credit crisis. Americans would be put out if Amy Winehouse went to tell them how to end the housing crisis. I don’t see why Africans shouldn’t be perturbed for the same reasons,” she replies

[...]

We finish with a coffee. Moyo’s book ends on an equally energising note, that of an African proverb: “The best time to plant a tree is 20 years ago. The second-best time is now.”

Gaza versus Somalia

On his Atlantic blog, Jeffrey Goldberg notes a similarity between the Israeli operation in Gaza and the American one, years ago, in Somalia ("Does 'Black Hawk Down' Portray an American War Crime"):

At least nine hundred people, maybe half of them civilians, have been killed in Gaza so far, the overwhelming majority presumably killed by Israel

[...]

This number, nine hundred, is large, and it brought to mind another conflict between a Western army and a Muslim insurgency, the one portrayed in the book and movie "Black Hawk Down." Roughly one thousand Somalis were killed by American forces over the twenty hours or so of the First Battle of Mogadishu (eighteen American soldiers, of course, were also killed).

I couldn't get an accurate read on how many of those Somalis were civilians, so I called my colleague, Mark Bowden, who wrote the book ["Black Hawk Down"¹, ²]. He said that eighty percent of the Somali deaths were of civilians.

Goldberg goes on to quote Bowden directly. Here's an excerpt of Bowden on the nature of the sort of asymmetric warfare conducted in Somalia in the early 1990s and in Gaza now:

"If you feel the need to go to war against an enemy that is not as powerful as you are, one of the tactics of the weaker party is to hide among civilians, and use the global media to advertise the horror of the onslaught. People on the receiving end of the bombs greatly exaggerate the casualties and get photographers to take the most gruesome of pictures, and at the same time, the people in charge of the stronger power try to minimize the number of casualties. If you live in a democracy, then public opinion really matters, and reports of dead children swells the criticism of the war. If you live in a dictatorship, then you don't care what the people think."

[...]

"The parallel with Mogadishu is that gunmen in that battle hid behind walls of civilians and were aware of the restraint of the (Army) Rangers. These gunmen literally shot over the heads of civilians, or between their legs. They used women and children for this. It's mind-boggling. Some of the Rangers shot civilians, some of them inadvertently and some of them advertently. They made the choice to shoot at crowds. When a ten-year-old is running at your vehicle with an AK-47, do you shoot the kid? Yes, you shoot the kid. You have to survive. When push comes to shove, faced with the horrible dilemma with a gunman facing you, yes, you shoot. It's not just a choice about your own life. If you don't shoot, you're saying that your mission isn't important, and the lives of your fellow soldiers aren't important."

One might point out that the U.S. involvement in Somalia started out as a humanitarian one, but, as Bowden noted in his book, the mission evolved into a war against one of Somalia's main clans.


¹Mark Bowden's book "Blackhawk Down" was masterly. He gathered information from essentially every available source (e.g., transcripts of U.S. military radio traffic, interviews with local Somalis, etc.) and reconstructed the battle, the events leading up to it, its aftermath. Bowden also placed the events in their larger context, all the while making "Blackhawk Down" a page-turner. He's a first rate journalist.

²Ridley Scott's 2001 movie adapted from Bowden's book, "Blackhawk Down", featured a number of actors who went on to become much more prominent over the next several years: Ewan McGregor, Josh Hartnett, Eric Bana, Jeremy Piven, Jason Isaacs, and Orlando Bloom.

Vaalco Energy Update

Vaalco Energy (NYSE: EGY) ended the week up over 20%, after releasing an update on its drilling program. From the release:

HOUSTON, Dec. 31 /PRNewswire-FirstCall/ -- VAALCO Energy, Inc. (NYSE: EGY - News) today provided an update on the new development well being drilled in the Ebouri field and the new appraisal well (North Ebouri) being drilled in the Etame block. VAALCO commenced drilling these wells in November with the jack-up rigs Adriatic 6 and Pride Cabinda, respectively, as previously announced.

For the development well in the Ebouri field, VAALCO announced that it has drilled one pilot hole to the south of the original Ebouri discovery and a second pilot hole to the northeast of the original discovery. Both of these pilot holes were successful in delineating additional Gamba sandstone reservoir above the oil water contact, thereby increasing the acreage and reserves of the Ebouri field. VAALCO is currently completing the development well horizontally on the same orientation as the second pilot hole. First oil production from this well is expected in January 2009.

The Company also announced that it drilled the North Ebouri appraisal well in the Etame block approximately 1.5 miles to the northeast of the Ebouri platform and found 21 feet of oil column, further expanding the Ebouri field. VAALCO is now planning a sidetrack to optimize the location for a potential second horizontal development well. In addition, the Company is planning two exploration wells (North Etame and South East Etame) on newly mapped structures. The wells will be drilled back to back using Pride Cabinda.

VAALCO continues to expect production at a rate sufficient to bring total production from the Etame license area to approximately 25,000 barrels of oil per day (bopd). The Etame license production areas currently produce approximately 20,000 bopd, of which VAALCO has a 28.1% working interest.

"Results from the Ebouri development drilling have exceeded expectations, and we are pleased with the initial results from our drilling program in the Etame block, with more wells to come," said Robert L. Gerry, III, Chairman and CEO of VAALCO. "We have substantially enlarged the productive acreage of the Ebouri field, thereby greatly enhancing the recoverable reserves. We look forward to continued success with our exploration program."

Last time EGY rose over $7, I sold 5% of my position and used those funds to buy more AYSI.OB. I may sell a little more at these prices, but I plan on holding most of my EGY for the long term, as I'm bullish on oil over the next five years, and I'm bullish on Vaalco's ability to increase its reserves through its drilling program. The image above, which shows Vaalco's Ebouri field, is from the company's website.

An Unprecedented Investment in Food Security

Yesterday, the Financial Times reported that South Korea's Daewoo Logistics had leased half the arable land on Madagascar ("Daewoo to cultivate Madagascar land for free"). From the article:

Daewoo Logistics of South Korea said it expected to pay nothing to farm maize and palm oil in an area of Madagascar half the size of Belgium, increasing concerns about the largest farmland investment of this kind.

The Indian Ocean island will simply gain employment opportunities from Daewoo’s 99-year lease of 1.3m hectares, officials at the company said. They emphasised that the aim of the investment was to boost Seoul’s food security.

“We want to plant corn there to ensure our food security. Food can be a weapon in this world,” said Hong Jong-wan, a manager at Daewoo. “We can either export the harvests to other countries or ship them back to Korea in case of a food crisis.”

The editors of the paper criticized the terms of the deal as "neocolonial" in a related editorial, "Food security deal should not stand".

Hopefully, someone from the precision agriculture company Hemisphere GPS (TSX: HEM.TO) has arranged a sales call with Daewoo.

The graphic above is from the FT article.

A Conversation with the CEO of Vaalco Energy

The CEO of Vaalco Energy (NYSE: EGY), Robert L. Gerry III, was kind enough to spend a few minutes on the phone with me today. A few notes from our conversation:

- He estimates that the per-barrel cost of production of any oil produced by Vaalco's current exploration projects will be similar to the cost of the company's current production, i.e., about $10 per barrel.

- No predictions on oil prices, but given Vaalco's low cost of production, Gerry was unconcerned. "We can make money on $20 oil," he mentioned.

- Regarding the political environment in West Africa, he said the government of Gabon had been great to deal with, and Vaalco hasn't had any problems there. He noted that Gabon is one of the more stable countries in Africa (as we mentioned in a previous post, "Vaalco Energy Reports"). Vaalco currently has an office in Angola as well, in support of its exploration there.

- Gerry estimated that the company would be able to maintain daily production rates of about 25,000 barrels through '09, but noted that its FPSO¹ would be about maxed-out at these levels. He mentioned that the rates to lease an FPSO currently average about $70,000 per day, but given the current correction in crude, these might start coming down at some point. If they do, he'd consider locking in low rates on one in advance.

¹Floating Production, Storage, and Offloading vessel -- see the image above, which comes from Vaalco's website.