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Shortages pressure Syria to ease measures for importing grain, fuel

By Suleiman Al Khalidi - Jan 15,2013 - Last updated at Jan 15,2013

AMMAN — Syria has started to allow private firms to import fuel and plans to eliminate all tariffs on many basic commodities as it seeks to cope with shortages, soaring prices and public discontent in the midst of a civil war.

Senior trade officials and businessmen contacted by phone from Damascus said the moves to liberalise imports of basic goods were part of an economic plan prepared by a committee headed by Qadri Jamil, deputy prime minister for economic affairs, that was expected to win Cabinet approval soon.

Essam Zamrick, vice president of the powerful Damascus chamber of industry, indicated that the proposed measures would affect 17 basic commodities including sugar, rice, tea, wheat, soy, vegetable ghee and barley.

"Eliminating all tariffs on basic commodities that are crucial to Syrian household's livelihoods and allowing fuel imports by businesses should limit further price increases of basic foodstuffs and help stabilise prices for consumers," he said in an interview.

President Bashar Assad's government has made the supply of basic foodstuffs and subsidised fuel in government-controlled areas a top priority to keep public discontent at bay, businessmen and analysts said.

The new measures will do little, however, to alleviate severe shortages in large parts of rural Syria controlled by the rebels.

On fuels, Syria's minister of economy and trade earlier this year issued a decision to allow private sector imports of gasoil and diesel for a trial three-month period under certain guidelines approved by the oil ministry, the businessmen added.

The programme was the first to allow fuel purchases outside of a state monopoly and may reduce shortages at petrol stations, which the authorities blame on rebel attacks against government-owned fuel tankers.

Oil producer Syria has two refineries but needs to import diesel and gasoil to meet domestic demand for heating and for transport.

It has faced diesel shortages since the European Union and the United States tightened trade sanctions last year but continues to get some shipments from eastern Europe and Iran.

Some Damascus-based traders said reducing the cost of imported foodstuffs and allowing the private sector to supply fuel would reduce price fluctuations and help businesses start building inventories depleted after almost two years of violence.

Customs duties on many commodities have been only 1 per cent, but extra surcharges and non-trade tariffs levied by Syrian ports normally push costs much higher, even on basic commodities, businessmen and importers indicated.

"There a lot of non-trade tariffs, which if you add them together you are talking about at least 5 per cent, and so these steps would make a real difference," said Zamrick, a leading advocate of the proposals.

Syrian imports have dropped sharply since the uprising, and essential foodstuffs now comprise the bulk of cargo being unloaded in Syrian ports, according to traders and importers.

Damascus-based traders said an increase in private imports of wheat, yellow corn, sugar and fertilisers, mainly from eastern European traders, together with more state purchases of rice, sugar and corn have increased supplies coming to the main ports of Latakia and Tartous since October.

Private importers say the bulk of Syrian grain imports in 2012 were mostly brought from eastern Europe, where little-known local suppliers have shown readiness to broker deals avoided by major trading firms worried about sanctions.

Leading grain suppliers said the state grains procurement arm had got approval to import 1.3 million tonnes of soft wheat from Russia and Ukraine this year, a sign the authorities could be seeking to rebuild a depleted strategic stockpile.

A shipment of 100,000 tonnes of Ukrainian wheat bought for around 30 million euros ($40.1 million) has already arrived this month, a senior grains trader noted.

State deliveries of flour and wheat have dropped sharply in large areas under rebel control, and bread shortages have worsened the humanitarian plight of millions of displaced Syrians across the country.

The authorities blame rebels, who have seized over 23 flour mills in the Aleppo area.

People in government-held areas do not face the same scale of bread shortages, according to businessmen and grain suppliers, who blame black-market profiteering and hoarding for the disruptions to supply in those areas.

"Essential items are available. There are no shortages but the problem is with unscrupulous traders and profiteers," Zamrick said.

A yearlong policy of reducing customs tariffs to encourage businesses to import foodstuffs has instead encouraged the smuggling of goods out of Syria and into Turkey, which has a high tariff regime, some businessmen say.

"The borders are open now, and many of the importers in Aleppo and Idlib are bringing goods to the Syrian ports of Latakia and selling them directly to Turkish traders," said Ahmad Zain, a major Damascus-based commodities trader.

"The imports of sugar, rice and tea have increased a lot due to this," Zain added, citing as an example over 30,000 tonnes of tea imported last year, exceeding annual demand levels of about 24,000 tonnes.

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