Trade Crude Oil

Damascus, Syria David Rosenberg / The Med – Syria’s turmoil is showing signs of reaching the country’s kitchens as disruptions in transportation and trade sanctions are conspiring to shrink supplies and boost prices at a time when harvests are constrained by poor weather.

The United Nations Food and Agriculture Organization (FAO) has increased its estimate for Syria’s harvests slightly since it last officially published figures in October. But, Mario Zappacosta, economist at the FAO’s Global Information Early-Warning Systems (GIEWS), said the higher figure is unlikely to be enough to prevent a food crisis.

GIEWS now estimates the Syrian production of wheat and barley in the harvest that ended last August at about 4.2 million tons, which is up from slightly less than 4 million tons in its previous estimate. But that still leaves it below the average crop size of the previous five years. Worse still, getting the food to consumers is more difficult than ever as unrest snarls transportation and sanctions have raised the cost of fuel.

“We categorize it as a problem of access. Especially in urban areas that are affected by the security situation, it is very difficult to supply shops in the market. We can imagine a situation where there [farm] products are harvested and stored, but markets aren’t functioning,” Zappacosta told The Media Line.

Cereal crops provide the most important part of the Syrian diet and are the only ones monitored by GEIWS. But other foods, like fruits and vegetables, are even more likely to suffer from the transportation problem because they have such a short shelf life and cannot be stored for as long.

A food crisis would pose a significant challenge to the beleaguered regime of President Bashar Al-Assad, who is coping with international diplomatic and trade isolation, a contracting economy and an opposition more ready than in the past to use arms. The president has struggled to keep the economy afloat and Syrians content, raising deposit rates to support the currency and maintaining subsidies of basic goods at great cost to the treasury.

“All this is an indication to the business community that the Syrian government is floundering on how to cope with economic deterioration,” Ayesha Sabavala, an analyst who follows Syria for the Economist Intelligence Unit (EIU), told The Media Line. “A rapid decline in economy could also cause the army or people in the government to abandon support of Al-Assad. They might see support for him comes at too heavy a price.”

Some analysts say that the disruptions wrought by misguided farm policies and drought were a key factor in pushing Syrians into rebellion. The drought, which struck much of northern and eastern Syria after 2006, forced tens of thousands of farm families to migrate to camps on the outskirts of Syria’s cities in search of work.

The unrest, now in its 11th month, makes it difficult for aid workers and experts to fully assess the situation. GEIWS uses satellite images and uses estimates to arrive at its numbers for output and consumption, but like other organizations it has very little information about conditions inside the country.

Nevertheless, in its latest assessment of global food security, released Feb. 10, the U.N. World Food Program (WFP) put the number of people defined as “food insecure” at 1.4 million since March 2011, when the uprising began. Food insecurity is the most severe in “hotspots” like Homs, Hama, rural Damascus, Dera’a and Idlib, the WFP said.

The official Syrian SANA news agency said two weeks ago that the direct damage to the farm sector caused by what it called “armed terrorist groups” had reached 450 million Syrian pounds ($7.8 million). The General Organization for Consumer Products reported that food worth 250 million pounds ($4.3 million) was stolen from its warehouses in the Homs neighborhood of Baba Amr.

If it happens, crunch time for Al-Assad is likely to occur this spring. That is about the time that the 2011 harvest will have been depleted even if the entire crop reaches Syrian consumers, according to GIEWS estimates.

“In general, the country is not self-sufficient. Domestic production is enough for the first eight months after the harvest [in August] and imports start to take its place in May and June,” Zappacosta said.

GIEWS estimates the country will need to import about four million tons of cereals during the current marketing year, which is down from the 4.6 million tons it estimated in October. But Damascus will have trouble meeting even the smaller shortfall because of trade sanctions.

The European Union’s ban on Syrian oil imports, imposed last September, doesn’t include food. But analysts say it has strained the country’s finances and made traders wary about doing business with it. European traders told The Wall Street Journal last month that a risk premium of around $10 a metric ton was being imposed on all wheat supplied to Syria through the private sector.

Meanwhile, the pound has plunged more than 50 percent so that a dollar is now worth about 58 pounds on the official market and 71 pounds on the black market. Most of the depreciation occurred in the final two months of 2011.

All that has made it more expensive to buy food abroad. But the cost of trucking local produce to market and even the cost of growing it have both climbed. Syrian farmers are highly reliant on irrigation, but the pumps rely on every more costly fuel.

Even where there is food, sticker shock is the new norm for the urban consumer. Since the unrest broke out, the price of a 25-liter (6.6 gallon) bottle of cooking gas in Damascus has risen to anywhere between $8.70 and $14 from $4.30, according to IRIN, the news service of the U.N. Office for the Coordination of Humanitarian Affairs. A tray of 30 eggs has increased to between $5.20 and $6.90 from $3.10; and a kilo of potatoes to between $1 and $1.30 from 35 cents.

Syrian inflation is likely to touch 12% this year according to the EIU.

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Damascus, Syria David Rosenberg (The Medi – As the Arab League agreed to go to the United Nations Security Council early this week with a resolution calling for Syrian President Bashar Al-Assad to step down, Russia was reportedly doing a major arms deal with the beleaguered regime.

The $550 million agreement to sell 36 Yak-130 combat aircraft will not do anything to tip the balance in favor of the Al-Assad regime, which has been engaged in a 10-month conflict with anti-government opposition. But Russia is almost certainly providing arms Damascus needs to hold back the rebels as well as mounting a diplomatic defense of its friend at the U.N.

In a rare glimpse into the Russia-Syria arms trade, a ship loaded with ammunition from Russia was briefly detained in Cyprus earlier this month before continuing its journey unmolested to the Syrian port of Tartus. Foreign Minister Sergey Lavrov has vowed that Russia will veto any sanctions as “unfair and counterproductive.”

“Syria is an important customer for the Russian military industry and the industry is quite keen to maintain the relationship,” Fyodor Lukyanov, editor-in-chief of the Moscow based foreign policy journal Russia in Global Affairs, told The Media Line. “Syria is one of the few remaining customers in the region and it hosts the only military base – a small one but still a base – that Russia still has outside its own borders.”

As the West – now joined by the Arab League – presses the Syrian president ever harder, Russia has emerged as his most important ally. Iran also backs the Damascus regime, but Tehran itself faces growing diplomatic isolation over its nuclear program and doesn’t wield a Security Council veto. China is opposed to Syrian sanctions, too, but analysts say it is likely to follow whatever line Moscow adopts.

Russia’s warm ties with Syria, and more exactly the Al-Assad family regime that has ruled the country four decades, starts with arms sales but it goes much deeper.

In the final two decades of the Cold War era, when the Soviet Union was a superpower competing for global influence with the U.S., Syria was its staunchest ally in the Middle East. Bashar Al-Assad’s father and predecessor Hafez armed his troops with Soviet weapons and advanced Moscow’s interests in the region.

With the collapse of communism and with Syria’s deteriorating economy, the relationship is not what it once was. But Russia maintains a naval base at Tartus and the two governments share a distrust of the West and its motives.

Indeed, the view from Moscow of what is happening in Syria is very different than the one in Washington or Brussels. Where the West sees events in Syria as a popular uprising against a repressive regime, Russia shares Damascus’ take, which sees the rebellion as conspiracy by the Gulf countries to bring down an ally of their foe Iran.

“Saudi Arabia, Qatar and others see this as an opportunity, as a chance to push back Iranian influence,” Lukyanov said. “From Russia’s point of view, it’s part of a geopolitical struggle between Iran and Saudi Arabia, where Syria is just a card.”

For policymakers in Moscow, the situation in Syria looks remarkably similar to the one in Libya last year, where another long-time friend, Muamar Al-Qaddafi, faced what was seen in the West as a popular rebellion against autocracy. Russia reluctantly agreed not to veto a U.N. decision to impose a no-fly zone over the country.

The resolution, as Russia’s leaders understood it, was to prevent Al-Qaddafi from killing civilians with aerial firepower. But the NATO forces that largely enforced the decision, Russians say, used it to level the playing field in the Libyan civil war to Al-Qaddafi’s disadvantage. Moscow lost a friend and customer for its arms and is now out of favor with the successor National Transitional Council.

Zvi Magen, a former Israeli ambassador to Russia, said Russia’s Syria policy is driven by memories of its Cold War rivalry with the U.S.

“There’s an element of business in the arms deals, but it’s mainly a political move to show the flag and to show support for Syria. It’s mainly a function of Russian relations with America than with the Syrian regime,” Magen told The Media Line.

For that reason – and because Moscow realizes that Al-Assad’s days are numbered – it may be prepared to make a deal with the U.S. over Syria, he added.

Nevertheless, analysts agree that the importance of the arms trade as a factor in Moscow’s calculations should not be overlooked. In an economy with few other industrial exports, Russia’s military industry is an important earner of foreign exchange and a powerful domestic political force.

The Voice of Russia radio’s website said in December without citing a source that Russian arms exports reached $11 billion last year, a three-fold increase from 2000. While the country’s biggest customers are India and China, the Middle East had been a growing market until the Arab Spring eliminated Al-Qaddafi and sanctions on Iran removed another customer. Syria alone, according to some estimates, accounted for 7 percent of all Russian arms sales in 2010.

A U.S. government study in 2009 estimated Russia’s share of the Middle East arms market grew to more than 15 percent in the 2005-2008 period, five percentage points more than in 2001-2004 as it offered more creative financing and payment options, counter-trade, offsets, debt-swapping, and, in some cases, licensing production locally.

Russia’s Interfax news agency reported in early December that Russia delivered $300 million of Yakhont anti-ship cruise missiles to Syria.

With numbers like that, it is no wonder that Sergey Chemezov, the head of the state arms export company Rosoboronexport, made clear he had no intention of halting business with Syria.

“There are no sanctions whatsoever regarding Syria,” he told Interfax on Wednesday. “If international sanctions are imposed by the U.N. Security Council, everything will change. And if there are no sanctions, why should we refuse to cooperate with this country? This is business after all.”

Nevertheless, Magen said, Russia is careful not to sell Damascus weapons like S-300 surface-to-air missiles that could alter the regional balance of power.

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Jerusalem, Israel David E. Miller – Syria was noticeably absent on Sunday from Hizbullah’s “news of Arab revolutions” bulletin on Al-Manar, the website of Lebanon’s armed Shiite faction and close ally of Damascus.

Across the Arab and Islamic world, Syria’s allies are treading cautiously as they watch one of the last remaining bastions of autocracy grapples with internal unrest. President Bashar Al-Assad may follow his peers in Egypt or Tunisia, who were forced to step down. But, if he doesn’t, friends and foes alike are wary about how the Syrian leader will act the day after.

“Lebanese media are careful not to take sides with regards to Syria,” Samir Al-Saadawi, the Beirut-based editor of foreign affairs for the Arab daily Al-Hayat, told The Media Line. “They don’t want to portray themselves as part of an anti-Syrian campaign. There is also a feeling that the Syrian president will prevail, and people don’t want to bet on the other side.”

In the most serious challenge to his rule since succeeding his father 11 years ago, as many as 100 protesters have been killed as security forces seek to put down a rebellion that erupted last week. At least six were killed in the coastal Syrian city of Latakia on Saturday in the second consecutive day of protests that began in the southern city of Deraa last week and spread across the country. On Friday, Syrian soldiers reportedly opened fire in at least six cities killing some 15.

Syria occupied Lebanon shortly after the start of the Lebanese Civil War in 1975. The Syrian presence reached its peak in the 1980s when as many as 30,000 troops were stationed in the country. Damascus was forced to withdraw its forces only in April 2005, after the assassination of former Lebanese Prime Minister Rafiq Al-Hariri sparked a chain of popular protests and United Nations pressure with withdraw.

Nevertheless, Syria remains an important factor in Lebanese politics, directly and through its patronage of Hizbullah.

In an interview with The Wall Street Journal on Jan. 31, Al-Assad acknowledged the economic and social problems plaguing his country. However he ruled out the possibility of Arab unrest reaching Syria because, he argued, the regime’s policies were more in-line with the people’s aspirations.

“We have more difficult circumstances than most of the Arab countries but in spite of that Syria is stable,” Al-Assad said. “Why? Because you have to be very closely linked to the beliefs of the people … When there is divergence between your policy and the people’s beliefs and interests, you will have this vacuum that creates disturbance.”

Iran, a close ally of Damascus, has imposed a media blackout of events in Syria, said Hamid Tehrani, Iran editor of Global Voices, an international blogger website.

“No government news agency in Iran is releasing any news about demonstrations or killings in Syria,” Tehrani told The Media Line. “The only related story was Fars News Agency reporting that 1 million text messages were sent from Israel to Syria to cause disorder.”

Iranian bloggers did, however, remark on the similarities between the Syrian uprising and previous demonstrations that took place in Iran, Tehrani said.

“They noted that the chants emerging from Syria ‘neither Iran nor Hizbullah’ were similar to those in Iranian demonstrations in 2009-2010 where protesters shouted ‘neither Gaza nor Lebanon’,” Tehrani said. “Iranians say, ‘They want freedom, just like we want’.”

Some Iranian bloggers highlighted the hypocrisy of the Iranian regime in supporting some Arab uprisings while rejecting others.

“The Islamic Republic considers it good when people around the world go to the streets and protest, except when it comes to Iranians, Lebanese, Syrians and Venezuelans,” Iranian blogger Irancnn wrote on March 23. “Yesterday Iranian protesters were considered rioters, today it is the turn of Syrians.”

Hamas, the Islamist Palestinian group in control of the Gaza Strip, maintains its political bureau in Damascus and enjoys close relations with the Syrian regime. Predictably, Hamas’ official media were also tight-lipped about developments in Syria.

Mkhaimar Abusada, a political scientist at Al-Azhar University in Gaza, said Hamas faced a dilemma vis-à-vis Syria. On the one hand it received material and political support from the Syrian regime, but on the other some of the protesters demanding change belonged to the Muslim Brotherhood, with which Hamas is affiliated.

“Hamas sees itself as belonging to the ‘resistance camp’ which includes Syria and Iran. It enjoys a very strong relationship with Syria,” Abusada told The Media Line.

“After Mubarak’s regime collapsed in Egypt, Hamas celebrated in the streets and handed out sweets, but they will definitely not be happy if something like that happened to the Bashar Al-Assad regime in Syria.”

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