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Exclusive: Sanctions block Syria's vital grain trade By Jonathan Saul Posted 2012/05/08 at 5:27 am EDT LONDON, May 8, 2012 (Reuters) — Syria is finding it increasingly hard to buy grain oninternational markets because sanctions have blocked its access totrade finance, while growing numbers of its citizens are strugglingto obtain food after more than a year of conflict. The European Union, the United States and other Western countrieshave imposed sanctions on President Bashar al-Assad's government inresponse to his bloody crackdown on a revolt that has cost morethan 10,000 lives. The measures, which include asset freezes and financingrestrictions, have hurt Syria's vital commercial grain trade. Syria relies on food imports for almost half of its total needs,with wheat used for food, while maize and barley are used mainlyfor animal feed. "Syria has deep problems at the moment finding companies willing tooffer grain such as barley. You can't open a letter of credit andthe risks associated with any deal seem to be rising all the time,"one trade source said. "The Commercial Bank of Syria (the country's largest state-ownedbank) is not accepted anymore and there are currency relateddifficulties, so they are going to find it hard to meet their grainneeds." A Syrian state agency issued an international tender last week tobuy 150,000 metric tonnes (165,347 tons) of feed barley. Last yearit tendered to buy 500,000 tonnes of feed barley but failed to doso. "Due to the problems they are facing, they are now having to tenderfor smaller parcel sizes," the source said. Last month the United Nations' Food and Agriculture Organisationforecast that Syria's cereal import needs in the marketing year2011/12 would rise to 4 million tonnes, 1 million tonnes higherthan the previous year. Separately, the International Grains Council has forecast Syriawill need to import 900,000 tonnes of wheat in 2011/12, up from500,000 tonnes in 2010/11. "Syria is facing trade problems and based on anecdotal reports whatseems to be happening now is that companies are pulling out of thecountry due to the security and operating risks, so that is achallenge for the government in terms of imports," Henry Wilkinson,head of intelligence and analysis at the Risk Advisory Group, said. "In Syria bread is subsidized, so controlling bread prices will bean important strategy for the government." HUMANITARIAN AID A confidential United Nations aid document obtained by Reutersshowed at least 1 million Syrians need humanitarian aid. "Access to food has become an increasing issue in Syria," the U.N.aid document said. "Over the past 12 months, there have been sharp increases in foodprices in many locations, unemployment has risen, the Syrian poundhas depreciated in value; and many of those who have relocated nolonger have access to subsidized food." In Damascus residents agree. They say prices have more than doubled— sugar, rice, meat, grocery and restaurants bills have allgone up. Some people said they were stocking up with supplies thatwould last them at least a month. Syria has not published economic figures for a year, making it hardto assess accurately the impact of the unrest and sanctions. LouayHussein, an opposition figure, estimated unemployment as high as 80percent. "There is no work, no business, and nothing is working,"he told Reuters in Damascus. "Now in Syria people are only buying the basics. And some people donot have money any more to buy the basics and are living on supportfrom others." While western sanctions are not meant to target food imports, thecomplexity of trade, including extensive due diligence, is expectedto weigh on deals. Legal specialists say for companies operating inthe EU, dealing with Syrian state entities involved in food orreceiving payments over a certain amount require authorization fromnational authorities. "No big player would want to burn their fingers on Syria at themoment and when it comes to selling on your own name or account,forget it - there are just too many hurdles," another trade sourcesaid. In contrast, Iran, Syria's main ally in the Middle East, hasmanaged to purchase over 2 million tonnes of milling wheat inrecent weeks, after the Islamic Republic managed to sidestepWestern sanctions using alternative financing routes. Trade sources said the possibility of merchant vessels beingstopped by authorities looking for weapons bound for either Assador the rebels was another disincentive. Last week Lebanese authorities seized a consignment of weapons onboard a container ship heading to the Lebanese port of Tripoli. Theweapons could have been transported by land from Tripoli to Syrianrebels. "The trade fears more monitoring of merchant vessels in theMediterranean by authorities looking for weapons bound for Syria,which is going to create extra problems and raise ... costs,"another trade source said. RISING FOOD PRICES With the violence continuing despite a ceasefire negotiated lastmonth, The World Food Programme said the number of people to whomit was supplying aid in Syria was expected to rise to half amillion in coming weeks from the 250,000 assisted during April. "Informal observations and field monitoring have shown thatvulnerability to food insecurity has increased dramatically inareas affected by the unrest," WFP spokeswoman Abeer Etefa said. "Overall poverty levels are also increasing, access to basicsupplies and services is deteriorating; since May 2011, prices ofmost items, notably food and fuel, have risen by approximately 50percent and the Syrian pound has devalued by approximately 50percent against international currencies." Trade sources said Syria may need to source its imports vianeighboring countries such as Jordan and Lebanon and smuggle it inusing trucks and railcars. "The only way it looks like they will meet some of their needs inthe short term is by smuggling across the borders," a trade sourcesaid. "They may also start to use middle men in places like Chinaand Russia." Trade sources added Iran, despite facing sanctions itself from theWest, was expected to be asked to assist with Syria's grainimports. Such consignments could be transported via Iraq or boughton behalf of Syria using networks set up by Iran. Iran signed a free trade agreement with Syria last week, Iran'sstate-run Press TV said on its website. "Iran has managed to get round the trade finance restrictions andis importing grain, and we should see Syria using the Iranians forgrain but that will take time," another trade source said. "In themeantime, Assad is in the firing line with the West and needs tofind solutions fast." (Additional reporting by Michael Hogan in Hamburg, SvetlanaKovalyova in Milan, Nigel Hunt and Sarah McFarlane in London,Stephanie Nebehay in Geneva and Mariam Karouny in Damascus; Writingby Jonathan Saul; Editing by Veronica Brown and Giles Elgood). We are high quality suppliers, our products such as Led Globe Light Bulb , China Waterproof Led Strip Light for oversee buyer. To know more, please visits PAR Led Spotlight.
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