DUBAI: When Russian tanks rolled into Ukraine on February 24, alarm bells started ringing far from the war zone. Many countries were found to be heavily dependent on the two warring factions for their wheat supplies, with Arab Middle Eastern and North African countries prominent on the list.
This is partly why the conflict feels much closer to home than the geographic distance would suggest for the governments of Lebanon, Egypt, Tunisia, Yemen and Sudan, as well as international aid agencies.
Within days, fighting had limited the capacity of both Russia and Ukraine to continue exporting wheat to one of their largest markets, which depends on lower-priced Black Sea grains as the main source of its staple crops.
Ukraine has closed several of its ports and the movement of ships in the Sea of Azov has been halted until further notice. The effect was immediate.
MENA countries, already suffering from food shortages due to higher import costs, budget deficits and conflict, now face an additional challenge. Any suspension or reduction in wheat shipments from Ukraine and Russia will deprive citizens of some of the world’s most food insecure countries of the ability to produce bread and other necessities.
Not only are Russia and Ukraine major players in industries like computer chips, petroleum, timber, grains and sunflower oil, but together they account for more than 14 percent of global wheat exports and a similar percentage of the global corn market.
According to estimates by the US Department of Agriculture, Russia is the world’s largest exporter of wheat and Ukraine is the fourth largest. Russia, Ukraine and Belarus are also among the world’s leading exporters of fertilizers.
Reuters, citing traders and bankers, has reported that the war has halted shipping from Ukraine’s ports, while financial sanctions have jeopardized payments to buy Russian wheat, putting additional risks on the shoulders of MENA region governments .
“Everyone is looking to other markets as it becomes increasingly impossible to buy stocks from Ukraine or Russia,” said a Middle Eastern commodity banker, citing ship disruptions, new economic sanctions and rising insurance premiums. “The market does not expect Ukrainian and Russian exports to resume until the fighting is over.”
In Lebanon, officials expect wheat stocks to run out in a month. In Yemen, which imports 90 percent of its wheat, there is real panic. Years of drought have led to near-famine and left most of the Yemeni population dependent on food aid. The situation has worsened since the Houthi took over the capital, Sanaa, in 2014.
Last year, Ukraine was the second-biggest supplier of wheat to the United Nations World Food Program, with much of the aid going to Syria, where nine in 10 of the country’s pre-war population now live at or below the poverty line, the UN said.
David Beasley, WFP Executive Director, said a lack of funding has forced WFP to halve rations for 8 million civilians, with more drastic cuts to come. “And just when you think that’s bad enough, now we have a war in Ukraine,” he added in a video posted to the food organization’s website.
“We obtain 50 percent of our grain from the Ukraine and Russia. It will have a dramatic impact on food, oil and shipping costs. Just when you think it can’t get any worse, it gets worse. Here is one disaster after another. It’s just heartbreaking.”
In Lebanon, images of an impending food crisis from the blasts that devastated the port of Beirut in August 2020 have etched themselves into the nation’s memory. While Lebanon has found a new place to store imported wheat, it must now find new sources of wheat supplies.
Noting that Lebanon imported around 60 percent of its wheat from Ukraine and Russia, Lebanon’s Economy and Trade Minister Amin Salam said the government had started talks with France, India and the US to buy wheat from them instead incur higher costs.
“I couldn’t buy a croissant or manoushe today,” Elio Alam, a Beirut resident, told Arab News on Thursday, referring to a popular Lebanese street food. “I stopped at a lot of shops and they all said they didn’t make the products to save flour for making bread. But bread is also missing from several bakeries.”
Given the poor state of the Lebanese economy, there are two concerns: where can the government get supplies from now and how can it pay for them? “The actual situation of public finances in Lebanon is far from clear due to the lack of professionalism in management. It is therefore impossible to determine whether there are still resources in the treasury,” Riad Saade, president of CREAL, an agricultural research center and consultancy in Beirut, told Arab News.
“Officials could still find ways to secure funding for wheat subsidies from other budget allocations. They will also ask for donations, which will have political implications. The US and France may consider supporting the Lebanese people. The WFP could also play a role.
“The international market is open and accessible. It’s about financing the procurement and dealing with the increased price caused by the crisis. Australia and Kazakhstan can also be sources of supply.”
Saade, not ruling out the possibility of bread riots and civil unrest, said, “We may have reached a situation where people have no choice but to revolt.”
As in Lebanon, officials in other struggling MENA governments have struggled to secure alternative grain supplies at affordable prices.
Syrian regime officials held an emergency meeting after the invasion began to take stock of the national reserves of grain, sugar, cooking oil and rice. Syrian President Bashar al-Assad‘s ministers are reportedly considering lowering the prices of some basic commodities in local markets and rationing oil for the next two months.
In addition to existing austerity measures, cuts would put more stress and financial strain on Syrians living in regime-controlled areas. Those living in rebel-held or Kurdish-administered areas of the country depend heavily on cross-border trade with Turkey, Iraq and Lebanon, which themselves have chronic supply problems.
Omar Karim, a laborer and father of three in rebel-held Idlib, one of the Middle East’s most food-stricken regions, said his family was “already living on the brink of starvation every day.”
After living under Russian and Assad regime bombardment for many years, Karim fears that his family will soon suffer the effects of another Russian war.
“Russia managed to invade us and is waging war inside and outside Syria,” Karim told Arab News. “I don’t know how to continue to support my family. What are we going to eat? Grass?”
Egypt also senses danger. Analysts believe the war in Ukraine could pose a serious threat to the country’s economy as the price of wheat has surged nearly 50 percent in recent days.
Michael Tanchum, a non-resident scholar at the Middle East Institute, said: “Egypt is already having to find alternative suppliers. A further escalation halting all Black Sea exports could also take Russian supplies off the market with catastrophic effects.”
Egypt imports the most wheat in the world and is Russia’s second largest buyer. According to S&P Global, it bought 3.5 million tons in mid-January. The Arab world’s most populous country has started shopping elsewhere, particularly Romania, but 80 percent of its imports come from Russia and Ukraine.
“Egypt can meet the challenge with about four months of wheat reserves. But to do that, Cairo must take immediate and decisive action, which can become even more effective with the timely support of its American and European partners,” Tanchum added.
The war in Ukraine also threatens to increase the cost of cooking oils in the MENA region and Turkey. A halt to imports from Russia and Ukraine has prompted panic buying of sunflower oil in Turkey, despite government assurances on the availability of staples.
Ships carrying vegetable oil from Russia, which supplies 55 percent of Turkey’s import needs, and Ukraine, which supplies 15 percent, have been delayed in the Sea of Azov. Concerns are likely to grow if the war affects this year’s crop in Ukraine and sanctions against Russia disrupt payments.
Amid the turmoil and chaos of the past two decades, threats to food availability in the Middle East have rarely reached alarming proportions. No matter how severe the disruption, officials always found a way to keep supplies of basic necessities going. The Ukraine crisis, which has plunged the world’s breadbasket into war, feels different.