Conflict over Syria’s Wheat Crops

Conflict over Syria’s Wheat Crops
TT

Conflict over Syria’s Wheat Crops

Conflict over Syria’s Wheat Crops

Ravaged by nine years of war, Syria’s wheat production has been nearly halved. Despite that, rivals are vying to gain access to remaining crops, fighting with the US dollar, the Turkish lira and arms.

General overview

In 2010, Syrian wheat production stood at over 3.5 million tons and authorities ensured the storage of a parallel amount in silos across the country. After protests erupted in 2011, followed by a drought, production took a nosedive, recording its lowest at 1.2 million tons in 2018.

Throughout the nine years of conflict, Syria’s agricultural sector maintained its role in securing the minimum food security. Its role was stepped up in areas outside regime control as economic activities had deteriorated there.

Even though it succeeded in providing for thousands of low income families during times of war, the agricultural sector had taken a hit.

Conflict had destroyed irrigation networks, reduced accessibility to fertile land, resulted in shortage of raw materials and labor force, and affected transportation of goods, according to a report released by the Syrian Center for Research and Studies.

More so, fires instigated by conflict had grazed crops to the ground.

Between 2016 and 2018, a significant decrease in precipitation occurred. With 70 percent of crops dependent on rain, this negatively affected it.

The area of irrigated land was cut during this period, due to the drop in the amount of water and the increase in the cost of fuel used in operating wells.

The agricultural sector was also affected by the scarcity of agricultural supplies and their high costs. Local enterprises only met 10.8% of farmers' fertilizer needs.

As for fuels, the price of diesel reached 350 Syrian pounds per liter on the black market, compared to the government-backed price of 185 pounds.

Financial capabilities of farmers were also slashed by fluctuations in the exchange rate against the US dollar. Between 2018 and early 2020, the Syrian pound depreciated dramatically, raising the prices of agricultural supplies and commodities.

Compensation

According to Syrian officials, between 2017 and 2018 Syria had imported around 2.2 million tons of wheat, 90% of which was Russian. At the start of 2019, the government announced a plan to purchase 400,000 tons of wheat from independent contractors after having bought 200,000 tons of Russian wheat again in January.

At the beginning of 2020, the Syrian government allowed the import of wheat flour for all who wish to do so, meaning that it was no longer restricted to a category of industries or productive activities. And weeks ago, Moscow donated thousands of tons of wheat to Damascus.

The regime had also expanded the area of planted wheat because of the increase in rainfall and the return of farmers to their homes.

A government official said that the rate of implementation of the wheat cultivation plan stood at 70%. Of the total 1.8 million hectares planned for wheat cultivation, 1.2 million hectares were completed.

The increase in cultivation has reached areas in Aleppo, Raqqa, Deir Ezzor, Idlib and Hasakah.

Conflict

Three warring parties are fighting to lay claim to Syria’s wheat production. Hasakah, Deir Ezzor and Raqqa fall under the control of the US-backed Syrian Democratic Forces (SDF).

Aleppo’s rural areas are controlled by SDF units, Turkey-backed opposition fighters, and regime forces.

Most of Idlib is controlled by Turkey-backed factions. In the east Euphrates region, Damascus controls two areas in Hasakah and Qamishli.

With the harvest season arriving, warring parties are competing to lure farmers to give up their wheat to them. The regime’s cabinet, a few days ago, approved raising the price of receiving wheat from farmers for the current season from 225 Syrian pounds to 400 pounds per kilogram (about 30 US cents, according to the exchange rate at that time)."

In mid-March, the Syrian government raised the price of wheat from 185 pounds to 225 pounds per kilogram.

An SDF official, speaking to Asharq Al-Awsat, said that there is around 1.2 million tons of wheat in Hasakah and east Euphrates regions under SDF control.

Fighting off the government’s offer to farmers, the SDF is offering to buy the wheat in dollars at the rate of 17 cents per kilo. This has weakened the position of the regime that’s been trying hard to lure farmers into selling it the wheat yield.



What Happens When Russian Gas to Europe Via Ukraine Stops?

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
TT

What Happens When Russian Gas to Europe Via Ukraine Stops?

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo

Austria's energy company OMV was informed by Gazprom that the Russian gas producer would halt deliveries of natural gas via Ukraine to OMV from 0500 GMT on Nov. 16 following OMV winning an arbitration case. Supplies of Russian gas to Europe via Ukraine may completely stop from Jan. 1 2025 after the current five-year deal expires as Kyiv has refused to negotiate the new terms of the transit with Moscow during the war.
Here is what happens if Russian gas transit via Ukraine is completely turned off and who will be affected most, according to Reuters.
HOW BIG ARE THE VOLUMES?
Russian gas supplies to Europe via Ukraine are relatively small. Russia shipped about 15 billion cubic meters (bcm) of gas via Ukraine in 2023 - only 8% of peak Russian gas flows to Europe via various routes in 2018-2019.
Russia spent half a century building its European gas market share, which at its peak stood at 35%.
Moscow lost its share to rivals such as Norway, the United States and Qatar since the invasion of Ukraine in 2022, prompting the EU to cut its dependence on Russian gas.
EU gas prices rallied in 2022 to record highs after the loss of Russian supplies. The rally won't be repeated given modest volumes and a small number of customers for the remaining volumes, according to EU officials and traders.
UKRAINIAN ROUTE
The Soviet-era Urengoy-Pomary-Uzhgorod pipeline brings gas from Siberia via the town of Sudzha - now under control of Ukrainian military forces - in Russia's Kursk region. It then flows through Ukraine to Slovakia.
In Slovakia, the gas pipeline splits into branches going to the Czech Republic and Austria.
Austria still receives most of its gas via Ukraine, while Russia accounts for around two-thirds of Hungary's gas imports.
Slovakia takes around 3 bcm from energy giant Gazprom per year, also about two-thirds of its needs.
Czech Republic almost completely cut gas imports from the east last year, but has started taking gas from Russia in 2024.
Most other Russian gas routes to Europe are shut including Yamal-Europe via Belarus and Nord Stream under the Baltic.
The only other operational Russian gas pipeline route to Europe is the Blue Stream and TurkStream to Türkiye under the Black Sea. Türkiye sends some Russian gas volumes onward to Europe including to Hungary.
WHY DOES THE UKRAINIAN ROUTE STILL WORK?
While remaining Russian gas transit volumes are small, the issue remains a dilemma for the EU. Many EU members such as France and Germany have said they would not buy Russian gas anymore but the stance of Slovakia, Hungary and Austria, which have closer ties to Moscow, challenges the EU common approach.
The countries, who still receive Russian gas, argue it is the most economic fuel and also blame neighboring EU countries for imposing high transit fees for alternative supplies.
Ukraine still earns $0.8-$1 billion in transit fees from Russian gas transit. Russia earns over $3 billion on sales via Ukraine based on an average gas price of $200 per 1,000 cubic meters, according to Reuters calculations.
Russia's gas pipeline export monopoly Gazprom plunged to a net loss of $7 billion in 2023, its first annual loss since 1999, because of the loss EU's gas markets.
Russia has said it would be ready to extend the transit deal but Kyiv has repeatedly said it won't do it.
Another option is for Gazprom to supply some of the gas via another route, for example via TurkStream, Bulgaria, Serbia or Hungary. However, capacity via these routes is limited.
The EU and Ukraine have also asked Azerbaijan to facilitate discussions with Russia regarding the gas transit deal, an Azeri presidential advisor told Reuters, who declined to give further details.