The Russian war on Ukraine is casting its dark shadows in Arab countries that import their wheat and oil derivatives, especially Lebanon, which is suffering under the weight of a historical, political, living and financial crisis.
For days, official warnings have been coming in Beirut about the severe shortage of wheat stocks, as well as warning importers of the shortage of oil derivatives, especially since Lebanon imports more than half of its needs from Ukraine, while oil prices are rising globally and are reflected in the cost of import, production and energy sources.
What are the main challenges of Lebanon with the ongoing war?
Speaking to Al-Jazeera Net, Director General of Grains and Sugar Beets at the Ministry of Economy, Grace Barbari, about the background of the wheat crisis, and the head of the Food Importers Syndicate, Hani Al-Bohsali, addresses a major problem facing Lebanon in importing oils.
Lebanon is unable to store wheat and grain, which it imports all its needs from, after the destruction of the silos of the port of Beirut (European)
The Russian war on Ukraine constituted an additional blow to Lebanon, because it was unable to store the wheat and grains it imports from, after the destruction of the silos of the port of Beirut as a result of the explosion of the fourth of August 2020. Since then, mills and ovens have been storing grains and wheat after unloading them from ships, Outside the direct authority of the state, which was imposed on the silos and was providing the country's needs for about 6 months to come.
Here, Barbari makes several points, including:
Lebanon annually imports 600,000 tons of wheat, an average of 50,000 tons per month;
60% of them are from Ukraine, and about 20% from Russia and Romania.
Currently, the mills have only 60,000 tons of wheat, which is enough for about a month and a half, and it is difficult to provide a larger reserve after the silos are destroyed.
The Central Bank of Lebanon supports 100% of wheat import at an official exchange rate of 1515 Lebanese pounds to the dollar, and there is difficulty in opening new credits to import it from sources in other countries, such as America, Argentina, India, Bulgaria, France and Romania, as a result of their financial burdens, shipping costs, and high global price indices.
Barbari: The government and Economy Minister Amin Salam are working in coordination with the Central Bank to communicate with other (European) wheat-exporting countries.
However, Barbari does not find that Lebanon will fall into a crisis of total wheat shortage, pointing out that the government and Minister of Economy Amin Salam are working in coordination with the Central Bank to communicate with other wheat-exporting countries to open credits for them, and stressed, "We will not allow it to be cut off from Lebanon so that it does not We directly touch the morsel of the poor."
And for reference, wheat is one of the very few commodities that the Central Bank has kept on subsidizing its import 100% with some chronic disease medicines.
Therefore, banking expert Ali Noureddine sheds light on the actual problem, telling Al Jazeera Net that everything that passes through the central bank is a result of the difficulty of opening credits, due to the scarcity of dollars and the dwindling value of the mandatory reserve in hard currencies (estimated at less than 12 billion dollars).
What happened to Lebanon after the war in Ukraine, according to Noureddine, is that the rise in the price of wheat globally forced the Central Bank to pay larger sums in dollars to import the same quantity of wheat;
"It is procrastinating and trying to regulate imports, which refutes the authorities' attempt to reduce the size of the wheat crisis in front of public opinion."
If the war in Ukraine continues for a long time, according to Noureddine, the Central Bank's ability to support wheat imports in the medium term will be reduced, and it will accelerate its inability to support its import.
Accordingly, there is a direct relationship between the ability of the Central Bank to support wheat imports, and the rise in its prices globally, and this may automatically be reflected in the price of a bundle of bread in Lebanon.
Here, Director Grace Barbari points out that the temporary avoidance of raising the price of a bundle of bread will be matched by a tendency to reduce its weight.
He said, "Importing wheat from other countries such as the United States will directly raise the cost of transporting it to us as its price increases."
Al-Bohsali: Lebanon is currently unable to import oils and its derivatives, and it needs 100,000 tons annually (Al-Jazeera)
Are oils dangerous?
The head of the Syndicate of Food Importers in Lebanon, Hani Al-Bohsali, is based on 3 basic elements of food security: the presence, access, and health of food.
He said that Lebanon mainly faces a problem in the second element as a result of the exorbitant rise in commodity prices, but the Russian war on Ukraine has exacerbated the challenges of food availability, in his opinion.
He explained to Al Jazeera Net that Lebanon is currently unable to import oils and their derivatives, and it needs 100,000 tons of them annually, and about 90% of them are sunflowers, and it is divided according to the following: 60 thousand tons of raw materials from oils for local industries, and 40 thousand tons of oils processed and canned.
In total, 60% of the two varieties are imported directly from Ukraine.
Currently, most food stores are complaining about a shortage of oil containers, which has prompted a segment of citizens to rush to buy and store them in anticipation of the monopoly and the expected rise in their prices.
The Lebanese are tracking daily the rise in fuel prices, from which subsidies were previously lifted (European)
According to the International Information Corporation, there is a significant imbalance in the trade balance between Lebanon and Ukraine in favor of Ukraine, as Lebanon does not export anything to it, while the value of imports from Ukraine is about $354 million as an annual average between 2012 and 2020.
In addition to wheat, which ranks first in imports to Lebanon, with an annual value of about 119 million dollars, Lebanon also imports from Ukraine crude oils (with a value of 44.3 million dollars), other grains, iron and some live animals.
While multidimensional poverty includes about 80% of the Lebanese, according to international estimates, most of the population of Lebanon is watching the Russian war with suspicion of its direct economic repercussions on them, and they follow daily the rise in fuel prices that were previously subsidized, while families incur more than half of their income on Paying energy bills.
Lebanese families incur more than half of their income to pay the (European) energy bills.
Economic writer Munir Younes finds that the crisis will worsen for all Arab non-oil countries that import their wheat, if the war drags on.
He told Al Jazeera Net that the Lebanese authorities will often continue to seek to buy time and save the costs of importing wheat in order to avoid popular reactions, even at the expense of depleting the central reserve.
Ali Noureddine believes that the continuation of the rise in the price of a barrel of oil to the highest level since 2013 will greatly raise fuel prices in Lebanon, regardless of the dollar exchange rate in the local market, and this will automatically be reflected in the prices of various food and consumer commodities.Keywords: