Ukraine war triggers food security crisis in Arab world and beyond
Ukraine war triggers food security crisis in Arab world and beyond
Before conflict tore the country apart, agriculture was one of Syria’s most important economic sectors and a major contributor to the nation’s coffers. Syria was the only Arab state which was self-reliant in wheat production, and once had the most productive agricultural system in all of West Asia.
This remained the case during, and in spite of, the decade-long war, during which its agricultural sector was doubly hit by extreme drought that impacted both crop yields and livestock herds.
According to a new report by the UN Syria Commission of Inquiry, while large-scale active fighting has subsided across most of the country, Syria is facing its worst drought in decades, which amid the conflict in Ukraine, is set to push many Syrians, already grappling with high inflation, to the brink of poverty.
Syria’s north-east region, currently under the control of the US-backed and Kurdish-led Syrian Democratic Forces (SDF), and where several hundred US troops remain present, was long considered Syria’s breadbasket, providing the country with a whopping 70 percent of its annual wheat supply.
Yet even this abundant region has been affected by multi-year drought and a devastated economy, leaving the Syrian government unable to purchase enough wheat to satisfy domestic demand. Syria has now been forced to import most of its wheat. Last year, the country imported 1.5 million tons of wheat, most of which came from its ally, Russia.
A regional dilemma
The Syrian Republic is by no means the only country in West Asia whose food security and living standards are under threat by the implications of Russia’s war with Ukraine. These states will also be inflicted with the burden of rising oil and gas prices which directly increase the cost of shipping, manufacturing, and general prices of goods and services. These in turn will add further strain to families faced with reduced purchasing power.
These serious security challenges come at a time when countries around the world are still grappling with the repercussions of the coronavirus pandemic. But the plight of West Asia will be particularly severe, as the region is already suffering from multiple financial, political, and economic crises.
Earlier this month, World Bank Vice President for the Middle East and North Africa (MENA) Farid Belhaj noted that the whilst the war in Ukraine caught the world by surprise, the MENA region is “unfortunately prone to such senseless violence.” The region, he added, is a mere 1,000 kilometers from Russia and Ukraine, but their economic interdependence and large trade relations bring them even closer.
Although the MENA region accounted for only 6 percent of the world’s total population last year, it accounts for over 20 percent of the world’s acutely food insecure people, Belhaj added.
He identified four sectors that will be particularly affected: food prices, oil and gas prices, remittances, and tourism. The biggest impact will fall on non-oil-exporting countries like Lebanon, Syria, Yemen and Tunisia, mainly due to disruptions to wheat and grain imports from Ukraine and Russia.
Russian and Ukrainian wheat
Right now, West Asian states face an imminent, direct threat to their food security via interruptions or declines in these vital imports – wheat and grains are the main component of the West Asian food basket staples. The indirect threats can be the high prices of other goods, fuel prices, gasoline, and others.
Russia and Ukraine export 25 percent of the world’s wheat production and 50 percent of other grain products. Approximately 40 percent of the MENA region’s grain imports come from Ukraine, considered one of the three most important grain exporters to the region. Russia tops the list as the world’s largest wheat exporter, shipping its grain mainly from ports in the Black Sea.
From the Azov Sea – which is situated wholly between eastern Ukraine and western Russia – wheat, barley and corn are exported to Mediterranean countries via ports that are now caught up in the conflict. If shipping lines can no longer operate in these conflicted waters, the region will need to urgently seek alternative supplies.
As an example, two ships equipped with wheat exports were destined to depart for Lebanon, but due to the Russian military incursion and its aftermath, the ships were unable to leave Ukraine.
Lebanon is one country likely to be hardest hit by the raging conflict. Large wheat silos at Beirut’s main port were destroyed during the devastating explosion in August 2020 in which over 200 lives were lost and thousands more were injured. The blast was swiftly followed by an acute economic crisis that led to a significant reduction in the Lebanese Central Bank’s foreign exchange reserves and the collapse of the state’s banking sector.
Lebanon’s Department of Economy and Commerce is striving to find alternative wheat supplies, including imports from the United States, India and Argentina. But these places are geographically much further afield, and with the sharp recent increase in oil and shipping prices, the Central Bank dollars provided to import wheat will fall short of required quantities.
The Lebanese will either face a severe bread crisis, or dollars will have to be secured from another source. Last week, it was reported that the country’s Minister of Industry George Boujikian ordered an export ban on domestically produced “food stuffs” as Lebanon braces itself for serious food security challenges in the upcoming months.
Egypt, already suffering from financial hardship and heavy external debt, is also on the precipice of a potential food security crisis. As the world’s largest wheat importer – specifically from Russia and Ukraine – Cairo has announced that it has enough stock for about five remaining months, and will raise its domestic production to create enough inventory for nine months, with the local wheat harvest season set to begin in April.
Nevertheless, uncertainties persist in terms of the long-term impact on Egypt’s budget and economy, especially if the war in Ukraine is prolonged, and grain and oil prices rise further in the coming weeks.
In addition to wheat and other food staples, Russian and Ukrainian tourists account for a large portion of all foreign tourism in Egypt, particularly to the popular Red Sea resorts of Sharm El Sheikh and Hurghada. Egypt is now looking for new ways to attract other foreign visitors, such as those from Western Europe and Arabs from the Persian Gulf.
Another option will be to reroute Russian tourists to the country via Turkey. As it stands, Egypt is now receiving empty Russian planes intended to repatriate stranded Russian visitors.
Threats and opportunities
Morocco is arguably one of the countries most affected by the war. Last year, Ukrainian wheat imports to the kingdom rose by 35 percent from the previous year, and Ukraine became the largest supplier of Moroccan wheat.
Elsewhere, Turkey’s economy has also been in freefall for years: the collapse of the Turkish lira, inflation, and the sharp decline in purchasing power for its citizens. The situation is set to worsen in advance of Turkish elections scheduled for June next year, if one considers that last year’s figures for Russian visitors accounted for 19 percent of all tourists arriving in the heavily tourism-dependent country.
While the economic outlook for most MENA countries looks dim, the Ukraine crisis has reaped positive developments for others. Oil-rich Arab Gulf states and Iraq are likely to see significant hikes in energy-related revenues due to fast-rising oil and gas prices, and so will Algeria.
As the EU’s third largest gas exporter after Russia and Norway, covering about 12 percent of EU imports, Algeria cannot make up for the shortfall in Russian gas and oil supplies to Europe, but it is certainly an outlet for the European continent. The North African country says it has enough wheat reserves to last until the end of the year, but is re-admitting French wheat imports after suspending them following a row over French colonial rule in Algeria’s past.
It may still be too early to predict the economic and financial fallout from events in Europe as markets have not yet determined how they will react to the Russian-Ukrainian war.
What is certain though, is that nations around the world, especially those in the many already vulnerable states of West Asia, must urgently face the challenge of securing the needs of their respective populations and protecting their compromised economies from collapse or further calamities.