Russia’s involvement in smuggling wheat out of the occupied regions or territories of Ukraine has been widely reported over the past year. In response, the US issued sanctions in September 2022 against Russian proxy officials involved in the theft of Ukrainian grain. While these targeted measures have managed to steer many countries in the Middle East and Africa away from buying the stolen wheat, Syria has become one of its primary destinations.

Due to the sanctions already imposed on both Russia and Syria they do not have many alternative trading partners and are also less concerned about any additional consequences they may face as a result of their cooperation. Their relationship has been further encouraged by Syria’s dire need for wheat in the face of increasing food insecurity, and Damascus’ agreement to overpay Moscow for the commodity in exchange for loans. The role of sanctions in encouraging this cooperation requires careful examination of the sanctions regimes, but without increasing food insecurity in Syria, particularly in wake of the earthquake.

Syrian wheat production

Prior to the start of the Syrian conflict in 2011, Syria produced around 3.5 million tonnes of wheat per year, enough to meet domestic demand. However, the large-scale damage to agricultural infrastructure, deepening economic crisis, territorial divisions, corruption, displacement, low profitability of agricultural activities and bad weather conditions have nearly halved Syria’s wheat production.

These stresses have significantly impacted the availability of subsidized bread, an essential food staple for many Syrians, forcing millions of Syrians to cut meals or pushing them into debt. The lack of subsidized bread has contributed to the food insecurity faced by 12.1 million Syrians – approximately 50 per cent more than in 2019 – which will be further exacerbated by the impact of the recent earthquakes.

As a result, the Syrian government has become heavily reliant on wheat imports from Russia, which currently range between 1.2 and 1.5 million tonnes a year. Research by the XCEPT project shows that not all the wheat going from, or through, Russia into Syria was legally obtained; occupied Crimea alone exported over 1 million tonnes of wheat to Syria between 2019 and 2022. Sources also highlighted that Moscow’s occupation of parts of Ukraine has significantly increased the overall volume of grains being shipped.

Impact of sanctions regimes

The above findings show that, instead of reducing illicit activities, sanctions against Syria and Russia have apparently increased their cooperation. While many countries would avoid purchasing wheat that may have originated in Ukrainian territory occupied by Russia due to a fear of secondary sanctions, this is less of a concern for a country like Syria which is itself a target of international sanctions.

Russia is also able to sell the stolen wheat to the Syrian government way above market price, as it is currently one of the countries issuing loans to the Syrian government. According to leaked documents, Moscow’s condition for the loans was that the money could only be used to pay specific Russian companies. As the conflict in Syria has led to a decrease in revenue streams and foreign currency, the Syrian government did not have much choice but to accept unfavourable finance conditions to finance the import of essential commodities like wheat. The Syrian government reportedly instructed its officials to award the wheat tenders to Russian companies, regardless of how uncompetitive their offers were.

For example, the Kremlin-linked wheat company OZK sold wheat to Syria at $350 per tonne when the international market price was around $257. Similarly, Syrian Prime Minister Hussein Arnous indicated in 2021 that his country imported 1.5 million tonnes of Russian wheat for around $319 per tonne, while the global price of wheat did not surpass $235.

Addressing the conflict supply chain of wheat

Despite substantial wheat imports, the Syrian government is still struggling with dire wheat shortages. XCEPT research indicates that this is due to corruption and nepotism found throughout the wheat supply chain, whereby the elites involved in the wheat trade find ways to profit while millions of Syrians are forced to go hungry. The intersection of the different conflicts, the theft of Ukrainian wheat by Russian entities, and the corruption which is causing food insecurity throughout Syria are all facets of the conflict supply chain of wheat. And this conflict supply chain is fuelling the wars in both Syria and Ukraine. The wheat stolen so far is estimated to be worth $530 million  – money used to support the war machines in both countries.

This reality is unlikely to change. Syria’s wheat production in 2023 is expected to remain around 75 per cent lower than pre-2011 levels due to insufficient rainfall and the high cost of agricultural inputs, such as fertilizers, seeds and fuel. This means its cereal import needs for this year is forecast at 2.7 million tonnes. This reliance on imports – in addition to the funds diverted to fuel conflict in Syria – almost guarantees Syria will remain a potential market for the stolen grains.