By Yara Bayoumy and Maha El Dahan
BEIRUT/ABU DHABI, Sept 12 For a government under
siege from rebels and international sanctions, President Bashar
al-Assad's administration shows no lack of confidence in being
able to go on feeding its people.
But as official media offer glowing reports of new bakeries
serving up tasty, subsidised bread and ministers assure Syrians
of ample stocks in state granaries, repeated failures of tenders
to import wheat and other staples tell a different story - one
echoed in tales from the streets of scarcity and rising prices.
Syria's worst harvest in decades, as civil war rages, means
more pressure to import on a government whose currency reserves
are dwindling - even if support from Assad's sponsor Iran, and a
shrinking population to support as Syrians flee the country and
provinces fall to rebel control, ease the burden and buy time.
"Extreme urgency" is a phrase cropping up in increasingly
frequent emails and faxes that Syria's state food import board
has been sending to firms trading grain in world markets,
inviting them to tender for shipments of wheat, rice and sugar.
Traders in Europe and Asia speak of invitations every other
week, compared to every other month in normal times. Yet for all
the urgency in the emails from Damascus, tender after tender has
failed to end in goods being shipped - mainly, traders say,
because Syria insists on unrealistic conditions that simply
ignore how financial sanctions have crippled its ability to pay.
"The government is in extreme denial about its food stocks,"
said one trader based in the United Arab Emirates whose firm had
long been a supplier to Syria, notably of rice, but refused to
bid at auctions where the chances of payment seemed remote.
Now, he said: "We have just stopped dealing with Damascus."
Like other traders with knowledge of Syrian tenders, he
spoke on condition of anonymity.
Quite how Syria's stocks of grain stand is impossible to say
with confidence. State grain buying agency Hoboob, or the
General Establishment for Cereal Processing and Trade, insists
it has 3 million tonnes of wheat in store, equivalent to a
year's supply for the entire 22 million population.
Many engaged in the cereals trade, both inside and outside
Syria, doubt that. Estimates collated by Reuters from more than
a dozen grain officials and local traders in late July after the
harvest suggested Syria would need to import 2 million tonnes of
wheat in the coming year to meet normal needs after a crop of
1.5 million tonnes, under half the prewar norm.
Syrian Prime Minister Wael al-Halqi denounced last week what
he called U.S. psychological warfare aimed at undermining the
economy and told state media the government had vital supplies.
The same week, an item on state news agency SANA appeared to
address concerns among people in the capital about shortages.
Reporting the opening of a new state bakery that would serve
up 13 tonnes of bread daily, it quoted customers praising the
quality of the loaves and quoted a minister, Samir Qadi, saying:
"Wheat is available and in large amounts at the warehouses."
Even in good times, bread provides about 40 percent of the
typical Syrian's daily calories, according to U.N. data, and war
and poverty may be increasing dependence on such staples.
The United Nations' food aid agency, the World Food
Programme (WFP), found in a study published in early July that
Syrians were typically having to spend at least some 50 percent
more on food than a year ago, with families reporting they now
spent between 40 and 80 percent of their budgets on eating.
Some four million Syrians need food aid, says the U.N.
Subsidised state loaves, costing just 15 Syrian pounds or a
few U.S. cents, are still available in government-held areas,
though people can wait for hours in line, pushing up market
prices for bread that is privately baked, or diverted from state
stores, to as much as 10 times those of subsidised loaves.
Damascenes speak of middlemen who buy bread from bakeries
across the capital and sell it for a premium round the corner to
people unwilling to spend hours queuing for bread. Shopkeepers
say they regularly pay bribes to government inspectors in order
to ignore increasingly unrealistic state price controls.
Rising prices have prompted people to hoard some foodstuffs,
people in the capital say. Some believe such concerns could
undermine support for Assad:
"It seems to me that people are ready to launch another
revolution," said a Damascus accountant who uses the name Abu
Yahya. "This one will be the bread revolution."
For Faysal Itani, a fellow at the Atlantic Council, a
Washington think-tank, shrinking currency reserves and a
75-percent slump in the exchange rate that multiplies the cost
of imports put the Syrian government in a very difficult
"It's very safe to say it's dire," said Itani.
"The government essentially can either rely on foreign
support, with Iran being the most likely candidate, and printing
money. They've done both. There's no way otherwise they could
Syrian officials were unavailable to respond to those
comments but on Tuesday state television said Damascus had
signed "major contracts" with Iran that would cover its needs
for food, medical and other supplies.
Backing from Tehran, for whom Assad is a key ally in the
Arab world, may help explain Syria's apparent indifference to
its series of failed international purchase tenders.
Foreign traders, from firms large and small whose business
it is to ship the wheat surpluses of North America and Europe to
buyers around the world, speak of puzzlement at conditions
Damascus set which put off virtually all would-be sellers.
Among such conditions, notably, have been placing the onus
on suppliers to gain access to Syrian funds which have been
frozen by sanctions and demanding that suppliers give Syria cash
in advance of the sale to guarantee that they will deliver.
"Syria's attempts to buy wheat, rice and other food using
frozen funds have not been successful because they are putting
the duty of the seller to sort out the payment in their own
country," said one commodities trader in Germany.
He added: "The Syrian government is still imposing the same
conditions as in normal times on its purchasing conditions with
huge penalty payments if conditions are not met.
"The risk is too big for trading houses."
Known as a bid bond, Syria has asked those tendering to sell
it cereals to put, say, 1 million euros in cash in a Syrian
account in advance. Such a condition is typical from buyers
whose business is in demand. It deters traders who are unsure of
sourcing the supply and penalises them if they fail to deliver.
In better times, Syria imposed bid bonds on its suppliers.
But for a government whose ability to pay is now in doubt, it
has helped put off many firms from even replying on tenders.
One source contacted by Reuters at Hoboob in Damascus
defended the condition, saying: "The bid bond that is asked for
shouldn't change, this is a normal condition for any tender.
"If traders feel there is an increased risk in dealing with
Syria then this should be reflected in their prices not a change
of the whole tender terms."
But for the trader in the Emirates, no price could
compensate for the risks of delivering rice or wheat to Syrian
ports and then finding that it could not be paid for.
"Offering higher prices just doesn't make any sense," he
said. "Dealing with them is like someone telling you they will
give you a glass of water but then put that glass of water in a
dark locked room and you can't get to it."
The government has offered to pay for food with funds held
in frozen bank accounts abroad, according to documents reviewed
by Reuters and confirmed by trade sources.
European Union and U.S. sanctions do not target food going
in to Syria. But they do target some state institutions and, in
particular, they are aimed at crippling financial flows, making
it very hard for Assad's government to do business in the world.
An analyst who observes the Syrian economy says the
government has turned to a small number of private merchants to
buy food staples and then sell them to the government at a
But foreign traders said many were reluctant to deal even
with private Syrian firms because of concerns about payment.
Some factors may help the government, at least for a while.
Above all, refugee outflows mean there are 2 million fewer
mouths to feed overall in the country. And huge areas inside
Syria are also beyond Assad's control, leaving millions reliant
on their resources and disparate rebel movements.
Although that also reduces the government's access to the
domestic harvest, the economic analyst said: "The central
government saves a tremendous amount of money by splitting Syria
in two, three, four parts - where some parts are getting
virtually no governance whatsoever."
Itani at the Atlantic Council said that situation could
allow Assad's government to prolong its survival: "It just wants
to hold on to the basic levers of power.
"They're not interested in economically sustaining the chunk
that they don't control - for obvious reasons ... So if they set
their aims low enough, they can survive for a long time,
printing money, relying on the Iranians, the Russians perhaps.
"I don't see why they can't do it for a long time."