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15 March 2022

The war in Ukraine could unleash a catastrophe on the Middle East

Food and fuel prices are at their highest since 2011, when increases helped trigger the Arab Spring.

By Abbie Cheeseman

BEIRUT –– For the past seven years, Vladimir Putin’s bombs, cluster munitions and unguided missiles have rained down on Syria’s schools, hospitals, water facilities and poultry farms in a military campaign characterised by a rampant disregard for civilian life. Now, as Russian forces rip the pages from the Syria playbook and unleash terror on Ukraine, fragile economies in the Middle East – many battered by war – face a new backlash from the Russian president’s adventurism: a push into even deeper food insecurity.

In many Arab economies, bread makes up the majority of calories consumed; its cost is a political issue. Globally, food prices are at their highest since 2011, when a surge in the cost of living helped trigger the Arab Spring. With donor governments significantly cutting aid, the timing could not be worse.

In Egypt, the biggest wheat importer in the world – 80 per cent of which comes from Ukraine and Russia – bread has been heavily subsidised for decades. For the staple baladi flat bread, the consumer pays about a tenth of the production price, keeping it affordable for the one third of the nation that lives under the poverty line. If Egypt and its neighbours cannot afford to maintain this subsidy in the face of rapidly rising costs (wheat is already 50 per cent more expensive than before the invasion of Ukraine), the political results could be explosive. 

A shipping consultant working on the Yemen file told the New Statesman that Australia was now offering to sell wheat to Yemeni companies at a whopping $600 per metric tonne. Ukrainian wheat on average would come in at around $255. Many US suppliers were also hesitant to enter the Yemeni market, they added, because of the possibility that the Houthi insurgents could again be designated as a terrorist organisation – a move that would wreak havoc with trade links and the distribution of humanitarian aid for the 17.4 million Yemenis that are food insecure.

“Yemen can no longer feed itself, so when you have a shock like this to the market… it is desperately worrying,” said Oxfam’s Richard Stanforth, adding that according to his sources, between December 2021 and March 2022, 42 per cent of Yemen’s grain came from Ukraine.

Lebanon, already in the grips of one of history’s biggest economic meltdowns, imports up to 90 per cent of its wheat and cooking oil from Ukraine and Russia. In the face of predicted shortages, it has, at most, just a month of wheat reserves remaining. Even if ministers’ pleas to the US to help pay for emergency reserves come through, there is nowhere to store any more wheat after the main grain silos were ripped apart in the 2020 Beirut port explosion. 

Trapped in a crisis triggered by decades of rampant corruption, Lebanon has left itself unnecessarily vulnerable to shocks in the global market. Analysts say it has done little to abate its reliance on imports since the severity of the food security crisis revealed itself two years ago.

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Bread is not the only problem, explains Stanforth. Grain prices and potential shortages affect feed for livestock across the region. Russia is also one of the largest fertiliser exporters in the world. 

As global oil prices soar, both Lebanon and Yemen are facing a compounding and severe deterioration in the value of their local currencies: purchasing power is through the floor as the price of necessary commodities skyrocket. It’s the perfect storm.

In the Houthi-controlled north of Yemen, it can already take three days to reach the front of a fuel line to buy 20 litres of petrol, with many resorting to buying expensive black-market fuel. In Lebanon, fuel lines are beginning to grow again. 

“With the majority of Yemen’s food coming through Hodeidah port, even if the price of grain stayed the same, the fuel costs to transport it across the country will still be passed onto the consumer,” said Stanforth. According to one of his Yemeni colleagues, local retailers have been told to expect a further 30 per cent hike in the cost of wheat products in the coming days.

“Even if you can buy wheat at double the price, very few people in Yemen will actually be able to afford it,” a representative for one of Yemen’s biggest grain importers told the New Statesman. “The issue is that there is no state-controlled import of goods, it is all private sector. That means there are no subsidies (as with many other Arab governments), leaving the already-hungry Yemeni people vulnerable to fluctuating market price and private sector competition.”

Yemen is preparing itself for a situation Lebanon knows all too well, following a summer of severe fuel shortages last year. Being unable to afford fuel can have catastrophic consequences for electricity provision to homes and hospitals, water pumps and internet services. 

Two weeks into a war that is being waged thousands of miles away, the fuel and bread crisis is already taking hold across the Middle East. Egypt has raised the price of a subsidised loaf for the first time since the 1980s. The cost of 20 litres of fuel in Lebanon is over two-thirds of the minimum wage. Syria is rationing wheat. Over the last week in Yemen, the prices for basic foods such as sunflower oil have risen by 40 per cent; dairy by 30 per cent and wheat by 25 per cent – triggering panic buying in some areas ahead of Ramadan, which begins on 2 April.

Given the deteriorating currency situations in Lebanon, Yemen, Syria and Afghanistan, large swathes of the populations are vulnerable to food shortages and fuel price increases. Poverty rates, food insecurity and hunger are growing by the day, leaving NGOs concerned that existing – and shrinking – aid budgets will be diverted to Ukraine. 

Pockets of famine-like conditions are returning to Yemen for the first time in two years; 90 per cent of Syrian refugees in Lebanon live in abject poverty; and over 12 million Syrians face food insecurity 11 years into the war. Ukraine’s crisis has unleashed a deepening humanitarian catastrophe on the Middle East.

[See also: How a Hezbollah-backed game show host cost Lebanon its rich Gulf allies]

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