Russian grain exports to Syria suspended due to uncertainty

By Olga Popova, Gleb Stolyarov and Jonathan Saul

MOSCOW/LONDON (Reuters) - Russian wheat supplies to Syria have been suspended because of uncertainty about the new government and payment delays, Russian and Syrian sources said on Friday, while two vessels carrying Russian wheat for Syria did not reach their destinations.

Russia, the world's largest wheat exporter, was a staunch supporter of Bashar al-Assad and supplied wheat to Syria through complex financial and logistical arrangements, circumventing Western sanctions imposed on both Syria and Russia.

A Russian source close to the government told Reuters supplies to Syria have been suspended because exporters are concerned by uncertainty over who will manage wheat imports on the Syrian side following the change of power in Damascus.

"I think no one would dare supply wheat to Syria under the current circumstances," the source, who spoke on condition of anonymity due to the sensitivity of the situation, told Reuters.

Shipping data shows one vessel, the Mikhail Nenashev, is anchored off the Syrian coast, while another, the Alpha Hermes, is heading towards the Egyptian port of Alexandria after remaining off the Syrian coast for several days.

The Syrian General Establishment for Cereals Processing and Trade (Hoboob) used to conduct wheat purchasing tenders but has increasingly relied on a network of international intermediaries to maintain Russian supplies despite sanctions.

Rebel leader Ahmad al-Sharaa's Islamist group, which ousted al-Assad in a swift campaign in Damascus last week, is asserting its authority over Syria's state by deploying police and installing interim officials.

However, they have yet to establish a new administration in Hoboob or create another commodity importing agency, according to Syrian sources, who also spoke on condition of anonymity.

RUSSIAN AND INTERIM GOVERNMENT IN CONTACT

A Syrian source told Reuters that vessels were delayed because of uncertainty over payments and that Russia and the interim government were in communication regarding the issue. A Russian industry source said Russian exporters were in contact with the Syrian side.

Russian Deputy Foreign Minister Mikhail Bogdanov said on Friday that Russia has made direct contact with the political committee of Syria's Islamist rebel group, Hayat Tahrir al-Sham, aiming to maintain its military bases in Syria. He did not comment on the wheat trade.

Given there was no payment from the Syrian side for the delivered wheat, a Russian industry source said the cargo of about 60,000 metric tons loaded on the two vessels might be sold to another buyer.

The two vessels can carry a combined 33,000 tons of wheat. However, part of the Russian grain trade with Syria is conducted using sanctioned Syrian vessels that are not visible on tracking systems.

Eduard Zernin, head of the Russian Grain Producers and Exporters Union, told Reuters this week that Russian grain exporters did not plan to unilaterally stop supplying wheat to Syria.

Zernin estimated Syria's imports at about 2 million metric tons of wheat per year, and said Syria was not a major consumer. A disruption in Russian wheat supplies, however, could cause hunger in the country of over 23 million people.

Dmitry Rylko from IKAR consultancy estimated wheat exports to Syria at 300,000 tons so far this season, with the country ranking 24th among Russian wheat buyers. Syrian imports vary from year to year depending on its own harvest.

Syria could produce up to 4 million tonnes of wheat in a good year, which would be enough for domestic needs and allows for some exports.

However, war and successive droughts have eroded its crop, forcing the country to rely on imports from the Black Sea region to sustain a bread subsidy programme essential for its population.

(Additional reporting by Maha El Dahan in Dubai and Gleb Bryanski in Moscow; editing by Guy Faulconbridge and Barbara Lewis)