Supplying the wheat to Lebanon should accompany reforms

Hanin Ghaddar
Hanin Ghaddar
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The war in Ukraine has hit the world in different ways. In the beginning, cast your eyes on the flow of refugees and diplomatic tension; however, food security has become one of the possible long-term and widespread repercussions. If the Russian war on Ukraine is prolonged and supply chains disrupted, Lebanon could face wheat shortages starting this summer, leading to severe food insecurity.

Lebanon imports at least 60 percent of its wheat supply from Ukraine. Several bakeries have already closed this week, and more are scrambling to provide bread to the Lebanese people, but the real crisis will hit when the country entirely runs out in a month or two. The problem exceeds the bread issue, as other items, such as poultry – which relies on grain from Ukraine and Russia – will eventually face shortages.

Suppose one adds to that the Beirut port's explosion in 2020, which has destroyed Lebanon's main grain silos, scenarios of poverty and hunger are not looking good for Lebanon.

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Last week, Amin Salam, the Minister of Economy and Trade, stated that the war in Ukraine forced Lebanon to consider stepping in for the first time in three decades to buy millions of dollars’ worth of wheat.

At the moment, it is seeking alternatives to Ukrainian and Russian produce. He added that there is no capacity at the central bank to pay higher prices.

The bank is currently subsidizing wheat at the cost of up to $400 per ton, but if international prices increase to $500, then the central bank's costs will increase because it still subsidizes wheat.

Thus, on behalf of the government of Lebanon, Salam asked the US and international donors to provide up to $20 million to help Lebanon stockpile its wheat reserves.

A couple of days later, the Lebanon Mills Association announced that the government had only ordered limited mill deliveries for Arabic bread. Consequently, all other wheat-based products such as manakeesh [a popular Lebanese street food], pastries, and a plethora of baked goods, will be prohibited for now.

Also, the Lebanese will only have access to bread in limited quantities for another month or two. Afterward, only international humanitarian assistance could resolve this shortage, knowing that Lebanon's financial crisis has already depleted the Central Bank from necessary reserves.

Lebanon's government – represented by relevant ministries such as economy, finance, and agriculture - hopes the international community will buy Lebanon one month of the country's wheat supply, or 50,000 tons, then gradually more.

If the Russian war on Ukraine is prolonged and supply chains disrupted, Lebanon could face wheat shortages starting this summer, leading to severe food insecurity, writes Heba Yosry. (Stock photo)
If the Russian war on Ukraine is prolonged and supply chains disrupted, Lebanon could face wheat shortages starting this summer, leading to severe food insecurity, writes Heba Yosry. (Stock photo)

There are news reports that Lebanon also wants the wheat to be stored in the countries of sale and brought to Lebanon when storage capacity allows.

The Lebanese government is worried about social unrest, significantly ahead of the upcoming parliamentary elections in May. With severe inflation and a drop in the value of the Lebanese Lira, many food items have become a luxury, and bread remained – until now – the only fully state-subsidized item, making it the core of diet for many.

With a shortage hitting bread as well, public unrest may ensue. So should the international community help the Lebanese people avoid starvation and turmoil? The issue is that every assistance program throws another question into the mix: how can you help the Lebanese people without boosting the political class?

The international community must help, but this assistance could also help the political class avert unrest and avoid complications ahead of the elections.

Pursuing the energy project to bring gas and electricity to Lebanon from Egypt and Jordan faces the same complexity, and the answer is not straightforward. The Lebanese government has avoided implementing anti-corruption reforms and still demands assistance.

However, it is not impossible. Conditioning aid could be tricky, but it should not come without pressure on the Lebanese government to do essential reforms.

Lebanon has been very slow in responding to the International Monetary Fund's requirements, although the IMF has made no aid or bailout that could happen without progress. The reforms' roadmap is obvious, and Lebanon must tackle the fundamental problem of weak governance.

Enhancing transparency, improving the performance of state-owned enterprises, particularly the energy sector, auditing of the central bank, a fiscal strategy, restructuring of the financial sector, establishing a credible monetary and exchange rate, and capital control are all needed.

These reforms will eventually help Lebanon regain its financial stability and confidence, allowing the promised $11 billion of aid – pledged by the international community at the Paris Meeting in 2018 - to come through. Reforms will guarantee this money will go to the Lebanese people and help through the current wheat crisis.

The IMF delegation will resume its negotiations with Lebanon later this month. This round could be a perfect opportunity to press for these reforms with no assistance without steps towards reforms. The world will help the Lebanese when they start helping themselves.

In addition, there are ways to assist without going through state institutions.

Many international and local NGOs are working on the ground and have a better transparency level and reporting mechanisms that the government institutions lack. And aid can come through organizations such as the Red Cross, Beit Ell Baraka, or USAID until the state implements reforms.

Syria next door faces the same crisis, and it smuggled much of Lebanon's wheat in 2019-2020. Therefore, without border control and reforms to border security to contain smuggling, there are no guarantees Lebanon's wheat will not be smuggled to Syria again.

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Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
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