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Exclusive-Russian grain exports to Syria suspended due to uncertainty

investing.com 13/12/2024 - 13:12 PM

Russian Wheat Supplies to Syria Suspended

By Olga Popova, Gleb Stolyarov and Jonathan Saul
MOSCOW/LONDON (Reuters) – Russian wheat supplies to Syria have been suspended due to uncertainty about the new government and payment delays, according to Russian and Syrian sources. Two vessels carrying Russian wheat for Syria did not reach their destinations.

As the world's largest wheat exporter, Russia was a strong supporter of Bashar al-Assad, supplying wheat to Syria through complex financial and logistical arrangements, thereby circumventing Western sanctions imposed on both nations.

A Russian source close to the government stated that supplies to Syria have been halted, as exporters are worried about who will manage wheat imports in Syria following the change in power. The source, speaking anonymously due to the sensitive nature of the situation, remarked, "I think no one would dare supply wheat to Syria under the current circumstances."

Shipping data indicates that the vessel Mikhail Nenashev is anchored off the Syrian coast, while another, the Alpha Hermes, is heading to the Egyptian port of Alexandria after lingering off the Syrian coast for several days.

The Syrian General Establishment for Cereals Processing and Trade (Hoboob) previously conducted wheat purchasing tenders, but now relies more on international intermediaries to sustain Russian supplies amid sanctions.

The recent shift in power, with rebel leader Ahmad al-Sharaa's Islamist group taking control of Damascus last week, is asserting authority over Syria's state by deploying police and installing interim officials, yet they have not established a new administration in Hoboob or another importing agency.

According to a Syrian source, vessel delays are attributed to payment uncertainties, but communication between Russia and the interim government is ongoing. A Russian industry source confirmed that exporters are in touch with the Syrian side.

Russian Deputy Foreign Minister Mikhail Bogdanov mentioned on Friday that Russia has contacted the political committee of Syria's Islamist rebel group, Hayat Tahrir al-Sham, to maintain military bases in Syria, but did not comment on wheat trade matters.

Due to lack of payment from Syria for the delivered wheat, a Russian industry source indicated that the cargo of about 60,000 metric tons on the two vessels might go to another buyer. The vessels can collectively carry 33,000 tons of wheat; however, part of the trade is conducted using sanctioned Syrian vessels that do not appear on tracking systems.

Eduard Zernin, head of the Russian Grain Producers and Exporters Union, clarified that Russian grain exporters did not intend to unilaterally halt wheat supplies to Syria. Zernin estimated Syria's wheat imports at about 2 million metric tons per year, asserting that while Syria is not a major consumer, a disruption in Russian supplies could lead to hunger among its 23 million population.

Dmitry Rylko from IKAR consultancy estimated exports to Syria at 300,000 tons this season, placing the country 24th among Russian wheat buyers. Syrian imports fluctuate annually based on domestic harvests.

In a good year, Syria could produce up to 4 million tons of wheat, sufficient for local needs and potential exports. However, ongoing war and drought conditions have significantly reduced crop yields, forcing Syria to depend on imports from the Black Sea region to maintain its crucial bread subsidy program.




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