Sanctions block Syria's vital grain trade

Syria is finding it increasingly hard to buy grain on international markets because sanctions have blocked its access to trade finance, while growing numbers of its citizens are struggling to obtain food after more than a year of conflict.

The European Union, the United States and other Western countries have imposed sanctions on President Bashar al-Assad's government in response to his bloody crackdown on a revolt that has cost more than 10,000 lives.

The measures, which include asset freezes and financing restrictions, have hurt Syria's vital commercial grain trade.

Syria relies on food imports for almost half of its total needs, with wheat used for food, while maize and barley are used mainly for animal feed.

"Syria has deep problems at the moment finding companies willing to offer grain such as barley.

You can't open a letter of credit and the risks associated with any deal seem to be rising all the time," one trade source said.

"The Commercial Bank of Syria (the country's largest state-owned bank) is not accepted any more and there are currency related difficulties, so they are going to find it hard to meet their grain needs." A Syrian state agency issued an international tender last week to buy 150,000 tonnes of feed barley.

Last year it tendered to buy 500,000 tonnes of feed barley but failed to do so.

"Due to the problems they are facing, they are now having to tender for smaller parcel sizes," the source said.

Last month the United Nations' Food and Agriculture Organisation forecast that Syria's cereal import needs in the marketing year 2011/12 would rise to 4 million tonnes, 1 million tonnes higher than the previous year.

Separately, the International Grains Council has forecast Syria will need to import 900,000 tonnes of wheat in 2011/12, up from 500,000 tonnes in 2010/11.

"Syria is facing trade problems and based on anecdotal reports what seems to be happening now is that companies are pulling out of the country due to the security and operating risks, so that is a challenge for the government in terms of imports," Henry Wilkinson, head of intelligence and analysis at the Risk Advisory Group, said.

"In Syria bread is subsidised, so controlling bread prices will be an important strategy for the government."

A confidential United Nations aid document obtained by Reuters showed at least 1 million Syrians need humanitarian aid.

"Access to food has become an increasing issue in Syria," the UN aid document said.

"Over the past 12 months, there have been sharp increases in food prices in many locations, unemployment has risen, the Syrian pound has depreciated in value; and many of those who have relocated no longer have access to subsidised food."

In Damascus residents agree.

They say prices have more than doubled - sugar, rice, meat, grocery and restaurants bills have all gone up.

Some people said they were stocking up with supplies that would last them at least a month.