Syria sugar refineries paralyzed by crisis

By: Jonathan Saul, David Brough

LONDON – Escalating violence in Syria has slowed sugar refining to a virtual standstill, with smuggling set to rise as Western sanctions hobble trade finance and disrupt imports of the staple sweetener, trade sources said.

The European Union, the United States and other Western countries have imposed sanctions on President Bashar Assad’s government in response to the bloody crackdown on a revolt that has cost more than 9,000 lives.

While those sanctions are not meant to target food imports, the complexity of trade, including extensive due diligence, is hampering deals.

Trade sources told Reuters that Syria’s four sugar refineries were either shut or producing modest amounts, with unrest contributing to the disruptions.

Latest forecasts from the International Sugar Organization had anticipated output from the refineries at 150,000 tons for the 2011-12 October-September season.

Supplies are having to reach Syria mainly by truck from neighboring countries, sources said, with highly profitable overland smuggling by private traders seen increasing due to difficulty in securing letters of credit for sea cargoes.

“There is serious demand for sugar which the government cannot supply because of the conflict, and the private sector cannot come up with what is needed because of financing issues,” one trade source said.

“The refineries appear to be not operating properly. So, it’s going to be tough for Syria on the sugar side.”

The ISO had anticipated Syrians would this year consume some 915,000 tons of sugar, which is also an important source of energy during times of conflict when access to other foodstuffs may be limited. Syria is also facing problems buying grain from international markets.

“We face difficulty in importing food because Lebanese banks and traders in the United Arab Emirates refuse to deal with Syrians,” a Syria-based source familiar with the matter said.

Legal specialists say for companies operating in the EU, dealing with Syrian state entities involved in food or receiving payments over a certain amount require authorization from national authorities.

“Prices have roughly doubled on various imported staples from coffee to dairy products,” said J. Peter Pham, a director with U.S. think tank the Atlantic Council.

“While the regime has managed through subsidies to keep prices stable up to now for goods with a domestic supply like fuel and sugar, its ability to do so for any sustainable period of time is highly doubtful. And even with the subsidies, shortages are reported – even in areas considered loyal to the regime to which supplies have been directed.”

Syria is also facing shortages of fuel and heating fuel.

Source: Reuters

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