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Yara-profits may end in controversial regime

  • A farmer plows his field outside Etiopis hovedskad Addis Ababa.Human Rights Watch believes that the regime in the country are using chemical fertilizers as a political power means to secure the farmers that do not support the regime.PHOTO: AP / KAREL PRINSLOO

Yara-profits may end in controversial regime

The company has signed an agreement giving the Ethiopian regime, 30 percent of the profits from the fertilizer project. Fertiliser use as a political instrument of power in the country, according to Human Rights Watch.

Henning Carr Ekroll , Åshild Eidem

Published: 01.aug. 2012 1:09 p.m. Updated: 01.aug. 2012 2:10 p.m.
In several articles Aftenposten has put the spotlight on Norway’s extensive relationship with the controversial regime in Ethiopia, which in practice is regarded as a pure dictatorship.

Large sums of aid pumped into the Ethiopian economy, which has experienced a solid growth. But the Norwegian business sector is heavily involved in the country:

Fertilizer producer Yara, where the Norwegian state owns 36 percent, has grown to become the largest supplier of fertilizer in Ethiopia.

30 percent of the regime

Now Yara has become the main shareholder in the company Ethiopotash, that extract raw materials for fertilizers. Yara is now planning to start a project to extract raw potash mining through production.

Documents obtained from Aftenposten.no Utenriksdepartemenet (MFA) shows that one of the conditions that Yara will be running the project is that the authorities in the country will have 30 percent tax on profits, a royalty of four percent and a share of five percent.

This means that nearly one third of the Norwegian company serving the business can end up in the pockets of what is considered as one of Africa’s most brutal regimes.

– The project will, if realized, will have an income tax of 30 percent. There is absolutely no problem: that there is taxation on raw materials produced in Ethiopia, we see that quite naturally, says information director Esben Tuman Yara to Aftenposten.no.

– Do you think it will be profitable?

– It is hoped that it would, but for now it is in an early stage that it is difficult to give a probability assessment. He stressed that Yara is committed to complying with both “our own, the Norwegian and Ethiopian regulations.”

Ethiopian Prime Minister Meles Zenawi has held power in the country since 1991, and opposition forces have effectively been turned down. In 2005, Zenawi received a controversial price of Yara, which is a major supplier of fertilizer to Ethiopia. It submits former CEO Enger prize to Zenawi.

PHOTO: AP NTB / Heiko Junge

Important means to power

But Yara’s increasingly central role in Ethiopia causing concern among many who follow developments in the human rights situation in Ethiopia.

– It is certainly problematic aspects of doing business with such a repressive regime like this. There are international and Ethiopian law which says something about how the land where this recovery going to expropriate from the people who had to live on or use of this earth. I think Yara must perform a comprehensive review in order to assure themselves and their shareholders that this project is not harmful, says African Senior Ben Rawlence of Human Rights Watch to Aftenposten.no.

In addition to problems associated with the production, he believes it is important to remember how the distribution of fertilizer used as a pawn in the political game in the country.

Yara fertilizer supplies sold directly to the authorities. These are sold on by the farmers in the country. In a report from HRW organization reviews how the government uses this as one of several means to punish opponents of the regime.

This is also previously documented in the book Ethiopia since the Derg , where the Norwegian researcher Lovise Aalen is one of the authors. She now works as a researcher in Africa, Christian Michelsen Institute (CMI) in Bergen.

– In rural areas there is a local administration that is tightly linked to the ruling party. They are responsible for distribution of fertilizers as part of their administrative tasks, and fertilizers have often been given the credit. In connection with the elections in 2000 and 2005, so there was a charge for this political considerations – the opposition claimed that they did not support the regime had met with a stronger claim for repayment, said Aalen to Aftenposten.no.

Read also

– There is never a good idea to go to bed with dictators

Norway has tripled aid to the dictatorship in Ethiopia.- Mysterious, according to Jan Egeland at Human Rights Watch.

In 2005, Yara awarded a controversial award to Ethiopia’s prime minister.In recent years the company has secured an increasingly important position, and the company has one of the bidding rounds wonevery contract for fertilizer deliveries.– It’s pretty obvious that this is something that is reason to question, even though it is difficult to see that there is necessarily some specific guidelines in the said Aalen.

Yara rejects on the other hand that there is any connection.

– For us there is no link between these cases. The prize is awarded by a committee where the majority is not part of Yara, and it happens on a professional basis. It is difficult to see that such prices may have some impact on the public tender process, information officer, said Bernhard Large Myhr Yara to Aftenposten.no.

Do not know how Yara’s role turns out

– Have you any idea of ​​whether Yara’s increasingly important position in the fertilizer market in Ethiopia has helped to make life easier for the country’s farmers?

– It is difficult to respond directly to it. We do not have private agronomists on the ground – our business is that we win big public tenders where we make deliveries to the government, which sells on. But having access to fertilizer in proper amounts is important. We also have some limited knowledge about the exact agriculture, beyond what we get from other sources.

Over a thousand people, many with backgrounds in Ethiopia and surrounding countries, demonstrated against the awarding of the Yara award to Meles Zanawi in 2005.PHOTO: AP NTB / Heiko Junge

Are you familiar with the stories of how the government’s sale of fertilizers used as a political tool?

Yes, we are aware of reports of this and it is a very serious matter if it turns out that it is correct. But it is now time that Ethiopia is among the countries in which Norwegian authorities have advised against Norwegian companies to trade, so this is probably a question that belongs in the political authorities, says Big Myhr.

Can help to strengthen the regime

Political advisor Unni Berge Foreign Ministry refers to the Industry and Trade involving the question of state ownership in Yara, but confirms that they are familiar with the Ethiopian authorities to have used chemical fertilizer deliveries political.

We have asked the international donor group check this, but so far no indications that this has happened in a systematic manner.

Berge says it is encouraging that 30 percent that the surplus in Yara’s latest project will go to the authorities.

These revenues make it possible to invest in the welfare of the country’s population, and we see that more children attend school and that child mortality declines. There are challenges in Ethiopia, the situation for political opposition.

– But it can not help make it even more difficult for opposing the regime strengthened financially?

– I have no comment beyond what I have said, says Berge.

Lovise Aalen at the CMI said that Ethiopia has had a good economic growth in recent years, but that it is difficult to know exactly where the government revenue ends up.

– Government party has good control over the economy, and the party people have many key positions in companies that have a strong influence.That way, even this income to help support the regime, she said.http://www.aftenposten.no/nyheter/uriks/Yara-overskudd-kan-ende-hos-omstridt-regime-6954518.html

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