Tuesday, October 11, 2016

Is Syria about to go hungry?

See this article from Reuters regarding the Syrian government's inability to finance wheat purchases from Russia.

http://www.reuters.com/article/syria-wheat-idUSL5N1CB4IL

Main quotes:

"ABU DHABI/MOSCOW, Oct 5 Syria is looking to finance a 1 million tonne wheat purchase from political ally Russia in an attempt to fill its supply gap after war and poor rainfall nearly halved its local crop.
The government of President Bashar al-Assad was forced to tender this summer for an unprecedented 1.35 million tonnes of imported wheat from Russia to ensure supply of the flat loaves that are a staple for the Syrian people...."

Assad needs to finance about 1 million tonnes. Note in the statement below that they have agreed on the pricing but Syria cannot finance the purchases with the Russians of all people.

"We have received 16 offers and have presented several scenarios for funding and we are awaiting the approval of one of them in order to proceed," the Syrian government source said.
The financing of the deal could be through immediate payment or through various credit facility options, he said without elaborating.


It was not clear when a final decision would be made.
In Moscow, a source in Russia's Agriculture Ministry said his government would only provide 100,000 tonnes of wheat as humanitarian aid but the rest would have to be paid for...."

It goes on to say the wheat harvest is the lowest in 27 years.

"...Two Russian agriculture sources said Syria might only be able to pay for a total of 250,000 tonnes of wheat and not the whole quantity of one million tonnes for which Hoboob is tendering.
Syria has previously tapped frozen funds in foreign bank accounts to step up purchases of food stocks including wheat. It has also relied on Iranian credit lines.
Syria's economy has been hurt by a depletion of foreign reserves that were estimated at around $16-18 billion before the conflict...."

Now the Syrian government ran out of foreign reserves about May of this year and its currency then collapses. What I find unusual about this situation is that the Russian government is literally unwilling to provide 1 million tonnnes of wheat that they actually have produced and are ready to sell to Syria, but not without cash. One also has to wonder how such tonnage would be shipped.

Earlier this month the Syrian government vehemently denied that it had been importing contaminated wheat as reported by the government of Lebanon. http://sana.sy/en/?p=89493

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