Gaza weary of Ukraine crisis as wheat supplies dwindle

Before the first Russian military wheel started turning towards Ukraine, the world feared the repercussions of such a war, especially since the two warring countries are among the world’s leading food and industrial exporters.

As soon as Russia made a threat against Ukraine, a range of countries began to consider the impact such a war would have on them, especially economically.

The Gaza Strip, a small enclave already suffering from the Israeli blockade and the Palestinian division, is among those affected by this war, which rages at a distance of about 2,000 kilometers (1,242 miles). Many products in Gaza’s markets are imported from Ukraine or Russia, especially flour.

Osama Nofal, director general of the Ministry of National Economy in Gaza, said in a February 27 press release that there is no need to worry about commodities imported from Russia and Ukraine, because there is enough wheat for three months.

Nofal warned traders against raising the prices of wheat, flour or other basic products, saying that traders who did so would be brought before the prosecution and justice.

He added that the ministry’s consumer protection teams will carry out inspection rounds to ensure traders are not manipulating prices.

Some traders dismissed the decision as unfair.

Abdel Dayem Awad, Managing Director of Al Salam Mills in Gaza, which imports Russian and Ukrainian wheat and is the largest flour mill in Palestine, told Al-Monitor: “Our stock is only enough for one month, and if the war continues, we may resort to other country. But this requires an increase in wheat prices and import costs, since Russian and Ukrainian wheat is cheaper than others.

Awad explained that Gaza society depends on Egyptian flour and flour that UNRWA distributes to refugees, but does not depend on Palestinian mills.

“Therefore, the Ministry of Economy should have promoted local flour, especially in light of this crisis, instead of asking us to create a strategic stock that we do not rely on locally anyway,” he said. -he adds.

“The local flour is of better quality, but its high price is due to high taxes. This is why we resorted to importation and competition for UNRWA tenders. We have contracts with [the UNRWA] and the world food program. Given the crisis, we cannot sell our imported flour to bakeries and factories, which prefer Egyptian flour. That’s why I refused the request of the Ministry of Economy to import wheat and sell it to bakeries,” Awad said.

“It is quite normal for traders to raise prices, because we buy at high prices while paying high taxes. Today, due to the Ukrainian crisis and rising international prices, many companies have stopped importing and no longer have stock, such as Al-Eman MillsPalestinian flour mills, Abu Taha Mills and Al-Huda Mills,” Awad added.

According to statistics 2019 According to the Observatory of Economic Complexity, Russia and Ukraine alone export a quarter of the world’s wheat needs, with Russia ranking first on the list of wheat exporters with a value of 8.1 billion dollars, while Ukraine ranks fifth with a value of $3.1 billion.

Ahmed al-Kafarneh, owner of Al-Gharbal Society, agrees with Awad. He told Al-Monitor that his company imports food from Ukraine and Russia.

“We currently have no stock of Ukrainian and Russian products, and with the global increase in raw material prices, we have had to reduce import quantities in order to limit losses. If the war continues, we will have to look to alternative markets like Spain, Turkey, China, Egypt and Israel. But since Russian and Ukrainian products are the cheapest, any alternative would result in higher prices.”

Kafarneh explained that he imports cheese, oils, flour and soft drinks from Russia and Ukraine, and that there are other companies in Gaza that import from these two countries, such as Abu MereiSamir & Raed Hamada and Al Safi.

He said that the sanctions against Russia will negatively affect the Palestinian economy, because “[Russia] is one of our main suppliers” and all imports pass through Israel, which incurs additional costs for traders.

Kafarneh said other options remain expensive. “I recently contacted Egyptian companies to import goods and was surprised that each ton of any goods now costs $200 more, apparently due to rising raw material prices and prices fuel markets, of which Russia is one of the most important producers”.

This comes at a time when Egypt informed Palestinian officials of its decision to raise the price of fuel and derivatives of fuel entering the Gaza Strip from Egypt by 10-15% from March. Gaza depends on Egypt for 70% of its fuel needs and 80% of its cooking gas needs.

Omar Shaaban, founder and director of Pal-Think for Strategic Studies, told Al-Monitor: “The impact of the Ukraine crisis on Palestine will be felt at three different levels. The first is political, as the Middle East no longer occupies center stage in world politics, which means that reporting on the Palestinian cause will diminish. The second is economic due to Palestine’s dependence on Russia and Ukraine as a source of goods. And the third is related to the international funding that will go to Ukraine if the war drags on, and that would mean that the budget to support the Palestinian Authority and the Palestinians will decrease.

Samir Abu Mudallalah, an economics professor at Al-Azhar University, told Al-Monitor: “80% of Palestinian foreign trade is with Israel, while the remaining 20% ​​also goes through Israel. Therefore, the Palestinian economy is affected by the repercussions on the Israeli economy and by all the goods that are imported and will increase globally. This is all the more true since Russia is the world’s largest exporter of wheat and Ukraine the fifth, and this will affect the Palestinians, especially the poor.

Abu Mudallalah added: “The Palestinians will not be able to escape the inflation that is expected to result from the war between Russia and Ukraine amid limited alternatives exemplified by Israel or Egypt, both of which will be affected and will affect later Palestine. However, it remains possible to mitigate the crisis through the implementation of the agreements signed between the Palestinian Authority and European countries and blocked because of Israel.

He explained that Palestinian imports amount to around $6 billion a year, while its exports do not exceed $1.2 billion. He said importing companies from Russia and Ukraine would suffer heavy losses if the crisis between the two countries persists.

Moeen Rajab, an economics professor at Al-Azhar University, told Al-Monitor: “Russia and Ukraine are rich in natural resources and agricultural crops. If the war is prolonged, there will be a deficit in the world supply of goods, which will lead to a world increase in prices.

“The negative repercussions are so far still limited, and if the war spreads, we will see prices rise, in which case our traders will look to other countries for an alternative to the crisis-ridden Ukraine” , added Rajab.

He said that in light of the siege and wars the Gaza Strip has witnessed, the enclave should have at least three months’ worth of food stocks. He called on authorities to continue to monitor prices and ensure traders do not raise them.

Edward N. Arrington