Syria civil war hits livestock hard

Global Meat News

Running on near-empty

As Syria’s conflict continues, its livestock sector weakens. Now facing a fifth year of civil war, livestock levels are down on even on 2014’s paltry levels, with the sector facing a shortage of fodder, veterinary vaccines and available pastureland.
According to a United Nations’ Food & Agriculture Organisation (FAO) and World Food Programme (WFP) report released in July 2015, food production in Syria "remains way below its pre-­crisis levels as the ongoing conflict continues to push more people into hunger and poverty".
The report was based on a food security assessment mission, estimating the country has lost 40% of its sheep and goats, 30% of its cattle and 50% of its poultry, compared to 2011. "We don’t have actual figures or estimates as the assessment was not as quantitative as it should be and was largely based on semi­-structured interviews, cross-­checking and informal discussions, while substantial areas were inaccessible,” said Markos Tibbo, FAO livestock officer for the Near East and North Africa. “But the situation has not improved (since 2014), it has only become worse."
The impact of the conflict on livestock varies throughout the country, depending on conflict zones and if the government is in control. In October, Syrian newspapers quoted the government’s director of agriculture for Damascus and its surrounding countryside, saying the livestock sector in his region had lost around $105m a year since 2011, with the number of sheep, cows and goats down by more than 60%.

Price 'doubles' in rebel areas  

In state­ controlled areas, the government is trying to impose price controls. London­ based Arabic daily Al Araby Al Jadeed reported in August that according to the state­-run General Organisation for Poultry (GOP), a kilo of chicken sells in government­ controlled areas for Syrian pounds SYP900 ($4.70). The price doubles in rebel­ held areas, while a kilogram of mutton sells for SYP3,800 ($20) in regime­ controlled Damascus, and SYP2,800 ($14.82) in rebel­ occupied north western Syria.
The GOP said that theft was a major problem, with up to 100,000 stolen chickens being sold every week in uncontrolled areas. High fodder, fuel and electricity prices have caused prices for chicks to double.
Livestock levels have plummeted due to the lack of fodder, available pastureland and a shortfall in imports due to the sanctions, while vaccine production has been devastated. Rebel groups have also been exporting livestock to fund militant operations, according to Al Araby Al Jadeed.

Livestock 'abandoned'

According to the FAO, Syrian wheat production in 2015, estimated at 2.445 million tonnes (t), looks set to be better than last year but is still 40% lower than in 2011, with the country facing an annual wheat deficit of 800,000t. “If you look at the sector as a whole, because of the crisis, livestock owners have moved from insecure areas, some bringing their livestock with them, others selling them or simply abandoning them,” said Tibbo. “There has been increased slaughter of female animals because of the difficultly and expensive of maintaining them, and partly because of the fear of theft.”
The lack of safe pastureland has raised the risk of disease. “This facilitates disease transmission, not only animals living in close proximity, but mixing animals from different parts of country creates a conducive environment for disease to spread,” said Tibbo. “It is really hard to get vaccines, and unless the cold chain is maintained, which is difficult in the current environment ­ the vaccines are useless.”

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Refugee influx promoting commercial crime in Lebanon/Jordan

Commercial Crime International
January 2016

The conflict in Syria has seriously impacted trade and business in the Levant. The millions of Syrian refugees that have fled to neighbouring Lebanon and Jordan are putting economies under serious strain, causing the authorities to turn a blind eye to illicit trade and unregulated business. Paul Cochrane reports from Beirut and Amman.

There is no doubt that Syria’s civil war, which erupted in 2011 and is now into its fifth year, has harmed the economies of neighbours Lebanon and Jordan, increasing their exposure to commercial crime. Trade routes that had transited Syria to and from Turkey, Europe and the Gulf states have been cut off, and instability has warded off tourists, an important revenue earner for both countries.

According to the United Nations, the Syrian crisis has cost Jordan more than $5 billion in economic losses, while a World Bank report from 2013 estimated that the Lebanese economy would incur a cost of $7.5 billion by end 2014 as a result of the conflict.
Lebanon, a country of 4.5 million, has taken in over 1.5 million Syrian refugees, and Jordan, with a population of 6.6 million, has 937,830 registered refugees, according to the UN High Commissioner for Refugees (UNHCR) office. Both countries are proverbially splitting at the seams from the refugee influx, with infrastructure and government services overburdened and investors hesitant to invest with a conflict next door, which includes the notorious Islamic State.
“The crisis is hindering competitiveness, affecting productivity and not creating income for companies already going through the impact of the (global) financial crisis and the slowdown in the overall economy. For Jordan, it has also created an unexpected burden on infrastructure, which was established, hypothetically, for 5 million people, but has reached more than our estimates for 2020, or by 2030,” said Hana Uraidi, CEO of the Jordan Enterprise Development Corporation (JEDCO).

Crime circle

With 80% of Syrian refugees living outside of camps in Jordan, and there being no official camps in Lebanon at all, refugees have had to rely on aid agencies or seek employment to survive. This has driven down wages among the lower social-economic groups with, for instance, agriculture wages in Lebanon down by 50% over the past four years, according to the UN. This means that not only have some refugees been tempted to turn to crime to earn a living, but law breaking has become more attractive to agricultural workers whose pay packets have dwindled.
Both governments are restricting employment to Syrians unless they are able to get official work permits. “To have a commercial business you have to be Jordanian or have a partner, split fifty-fifty, with a minimum capital requirement. Many cannot meet that, so they set up unregistered businesses or under the name of a Jordanian, and sign side contracts,” said an Amman-based commercial lawyer that wanted anonymity.

Blind eye

The refugee influx, equivalent to around 20% or more of both countries' populations, and the lack of government support due to high debt levels, has pushed the authorities to turn a blind eye to the grey as well as black markets to keep people employed and prevent social unrest. “(Jordanian) government enforcement is on and off. They know the situation; that people need to live. They are not going after them but not making life easy at the same time. It is difficult to balance humanity with law enforcement,” added the lawyer. 

A member of Lebanon's Internal Security Force (ISF) – the country's police – said off-the-record that commercial crime and intellectual property right infringement is not a top priority in the current environment, it is security. Lebanon has to deal with a porous northern and eastern border, with Islamic State (IS) and other rebel groups on the other side, while there have been several bombings linked to Islamist militants in recent years, the latest in early November (2015) in Beirut's southern suburbs. “We are trying to prevent smuggling, of course, but security and counter-terrorism comes first,” added the ISF officer.

More smuggling

That said, crime statistics are elusive and there is no statistical proof of a major up-tick in commercial crime within Jordan and Lebanon due to the crisis, although smuggling of goods to and from Syria has certainly increased and can be demonstrated. The smuggling of tobacco in particular has risen, according to the Lebanese authorities, while there has been a number of high profile seizures of Captagon, a pharmaceutical amphetamine drug which is manufactured illegally in Lebanon and exported to Syria and the Gulf.
There has also been a rise in Syrians acquiring passports through semi-official means, with a Jordanian passport selling for up to $500,000. In Lebanon, some 600 Syrians have managed to buy Lebanese citizenship following former President Michel Sleiman's departure from office in late May 2014 – the Lebanon parliament has yet to approve a replacement head of state. This is according to a UN source involved in Syria's planned reconstruction, by paying between $70,000 and $150,000.

Such passport acquisitions by Syrians, and the international sanctions on Syria and designated individuals, has led to a spike in due diligence investigations on Lebanese, Jordanian and Syrian companies, according to a Beirut lawyer who also wanted anonymity.

He added that the Syria sanctions are a major concern for the Lebanese and Jordanian governments so that financial and commercial interests do not fall foul of international regulators.

Transport crime

Transportation through Syria is a particular challenge for Lebanese and Jordanian companies due to the rebel controlled areas demanding transit fees for safe passage. According to the lawyer, Islamic State militants are charging between $2,000 to $5,000 for a truck, depending on the cargo, to pass through their areas, even providing receipts embossed with the Islamic State's logo. Such payments are clearly a form of bribe that has to be written-off through creative book-keeping – if governments are even checking.
“If you have to pay (a non-state actor) to transport goods, that could be seen as a commercial crime, as well as being an additional cost of business. But if the state is essentially limited in its functions, how much of a priority is it to check the account books of companies?” queried Karl Lallerstedt, programme director for illicit trade and financial and economic crime, at the Switzerland -based Global Initiative against Transnational Organised Crime.
A particular issue with assessing commercial and organised crime in the Levant is that the international regulatory and policy focus has been on countering the financing of the Islamic State and helping or hindering other Syrian rebel groups. Such high profile media and regulatory attention has meant less focus on curbing other financial and commercial crimes.
“A challenge is that illicit trade and organised crime is an ongoing problem, a dripping problem so an innate challenge, as opposed to more extreme cases like the Islamic State. The underlying data is so limited, it is harder to motivate action,” unlike against the Islamic State, added Lallerstedt.

Photo by Ibrahim Owais via Wikicommons

Qatar hits the gas to ride out economic storm

Middle East Eye

Qatar is the self-touted world's top liquefied natural gas (LNG) supplier and swing producer. But low natural gas prices are changing the game, with sellers no longer able to dictate prices, while global LNG production is ramping up, making for an increasingly competitive market with much lower revenue returns.

Qatar had ridden the proverbial crest of the wave of high energy prices. It had invested tens of billions of dollars in energy infrastructure, especially in LNG, with projects coming online at an opportune time when oil was at around $100 per barrel and LNG selling for up to $13 per million British thermal units (MBTU).

Doha's returns from hydrocarbons, which account for 49 percent of its revenues and 90 percent of exports, hit an all-time high of $147.9bn in 2013, but with oil now selling for around $30 per barrel, and gas more than halved on the spot markets to $5.75 MBTU, revenues this year are forecast at just $42.9bn.

For the first time in 15 years, Qatar will run a deficit of $12.7bn, if not higher, as the budget is based on a conservative $48 per barrel of oil. “If (energy) prices keep going down, that means the deficit for Qatar will widen, and could hit $20-$25bn. The link between oil prices and LNG is direct, and the more oil prices go down, the more LNG prices drop,” said Naser Tamimi, an independent Middle East analyst.

Buyers have seized on the price slump and heightened global LNG production to renegotiate long-term contracts that had locked them into prices way above current spot prices. For Qatar, this is prompting a strategy rethink, as 70 percent of its LNG exports are under long-term contracts.

“The pressure is mounting and Qatar has read the writing on the wall. They have renegotiated with India, and I think will do so with South Korea and Japan as they can't afford to lose the Asian market, which is nearly three quarters of Qatar's LNG exports. If buyers renew (contracts) it will be on their terms, not Qatar's,” added Tamimi.

Abritration: A harbinger of things to come

In January, India's Petronet successfully renegotiated a long-term gas deal with Qatar, with prices almost halved, from $12-13 MBTU to $6-7 MBTU. Indicative of Qatar no longer being able to dictate deals, a penalty of $1.8bn that Petronet accrued for buying below the contracted amount of LNG was waived.

“It is a bit of a harbinger of things to come,” said Justin Dargin, a Middle East energy expert at Oxford University.

But this was not the first renegotiation. “In the last few years there have been ongoing discussions with European buyers that have culminated in arbitration proceedings. The new part of the story is going beyond Europe to India,” said Karim Nassif, associate director at Standard & Poor's Ratings Services in Dubai.

The India deal has set a precedent for Asia, although Qatar was already being less rigid than in the past to retain customers. With China for instance, Qatar has a 25-year LNG contract, but with consumption spiking in winter, Beijing has to go to the spot markets to meet demand. “Qatar is trying to work to its clients needs, and reconfigured shipments to send more ships to China so they wouldn't have to buy from the spots. That is interesting as it shows that Qatar's willing to go beyond the contractual straight jacket, as until 2015, they wouldn't have wanted to do that,” said Dargin.

A further sign of Qatar's willingness to strike better deals was the inking of a $16bn long-term contract with Pakistan in February. Notably, it is a take-or-pay deal, allowing Islamabad flexibility in cargo orders that can be reviewed after 10 years - a more medium-term contract than with previous Asian contracts. The pricing of arriving LNG is based on 13.37 percent of the previous three-month average price of a barrel of Brent crude oil. “Before Qatar was trying to get 16 percent,” added Dargin.

Global supply changing the game

It is not just low energy prices that are making buyers want to renegotiate. Global supply of LNG is rising with 81.6 billion cubic metres (bcm) of new LNG supply slated to come on stream this year, raising global capacity by around 20 percent, to some 469 bcm per year. The big new players are in the East as well as the US due to the “shale gas revolution”.

“We're already seeing less Qatari LNG going to Asia, and they were really affected by increased production from Papua New Guinea, Australia and Indonesia last year. That is going to increase, so Qatar will be forced to look for markets outside of Asia,” said Andy Flower, an independent gas consultant.

An issue is what markets Qatar will target. Demand for natural gas in Europe is currently flat, and despite Europeans' intentions to reduce gas supplies from Russia due to geopolitical tensions, this has been more hyperbole than reality so far.

But even if that happens other suppliers will be waiting in the wings. “Qatar is banking on European efforts to diversify away from Russian gas and potentially go into arms of Doha, but they would have to compete with US gas,” said Dargin.

Buyers, especially in Asia, are also wanting to get LNG from as close to home as possible in case of transportation disruptions, such as through the Straits of Hormuz, the top choke point for global energy supplies.

“From the Asian side even if some of the LNG exports from the US or Australia are more expensive, they need security and diversification. They don't want to rely exclusively on Qatar and the Middle East. It is happening with China, Japan and other countries. Asian demand is a huge uncertainty,” said Tamimi.

Countries are also diversifying their energy portfolios. “The issue is ultimately the balance of nuclear power, coal and gas, and with nuclear back on stream [60 power plants are under construction globally], it aggravates gas demand. We will need to watch very closely how the gas demand equation plays out as there's the expectation of an LNG glut, with an increase of a third by 2018. It is important for Qatar to figure out where there is a decline in its own end markets,” said Nassif.

Asia bites back

When prices were high, Asian states were in discussions to set up a buyers' club to rival the Gas Exporting Countries Forum (GECF), the equivalent of OPEC. That idea has been largely muted due to the lower prices. “There were informal meetings about a year ago (among Asian importers) to negotiate en bloc with exporters, as they were sick of paying top dollar on LNG pricing. This shows the push back, particularly against Qatar due to its rigid pricing,” said Dargin.

While a buyers' club has yet to materialise, change is already afoot with the launch in January of Asia LNG futures and swaps on the Singapore Exchange (SGX). “This is another nail in the coffin of both long-term contracts and a 'unique' Asian-Pacific price. The development of various Asian LNG trading hubs is a significant phenomenon,” added Dargin.

Such developments may well result in a move away from long-term contracts and, significantly, gas prices pegged to the barrel price of oil. Following Singapore's move there may be more appetite for an international pricing system to follow the Henry Hub system in the US - the price benchmark for the North American gas market - where natural gas futures are bought on the New York Mercantile Exchange (NYMEX) for delivery 18 months in the future, rather than through long-term contracts.

“An interesting game changer will be to see to what extent these buyers push for a Henry Hub based contract instead of oil based,” said Nassif.

If history is anything to go by this might well happen, as crude oil sales were based on long-term contracts until the 1973 oil crisis prompted a need for more flexibility in the system. “I'll go out on a limb and say that by 2025, the LNG market will closely mimic the oil market,” said Dargin.

Ride it out?

Despite the rising competition, Doha has a major advantage over other LNG producers. The massive LNG infrastructure that was bank rolled over the past decade is being paid off, and no major investments are planned requiring further capital expenditure. Qatar also has its own fleet of 60 LNG vessels - including 27 of the huge Q-Flex and Q-Max ships - that are able to cover the world. As such, Qatar has a good handle on the supply chain from start to finish.

“Qatar is in a strong position as production is cheap, at $1.6-$2 MBTU compared to $2.5 in the US, and $3 in Australia. The Qataris can afford to sweeten their contracts and be more flexible to keep their market share,” said Tamimi.

Photo of West Bay, Doha by Paul Cochrane

Revealed: Secret details of Turkey's new military pact with Qatar

Middle East Eye

Documents obtained by Middle East Eye show strategic alliance includes pledge by Ankara to protect Gulf state from external threats

In December 2015, Turkey announced, to the surprise of many, that it planned to establish a military base in Qatar. Behind the scenes, the agreement was about forming a major strategic alliance.
After a 100-year hiatus, Turkey is militarily back in the Gulf and ramping up its presence overseas. In January, Ankara announced that it would also establish a military base in Somalia.
Specific details about the Qatar agreement, which Turkey described as an alliance in the face of "common enemies", remain scant, but Middle East Eye has acquired copies of the agreements, as well as further details, which include a secret pledge by Ankara to protect Qatar from external threats.

A long time coming?

Turkish-Qatari defence and military agreements go back nearly a decade. In 2007, Ankara and Doha signed a defence industry cooperation agreement, and in 2012, signed a military training agreement. (For the agreements go to bottom of article).
In March 2015, the Turkey-Qatar Military Cooperation Agreement was passed by the Turkish parliament, but the negotiations to create an overarching comprehensive agreement were still ongoing. Only in July 2015, according to France-based Intelligence Online, did the Qatari Emir, Tamim bin Hamad al-Thani, first tell the Saudi king about the true extent of the agreement. Under the agreement, about 3,000 Turkish troops, air and naval units, as well as special forces are to be based in Qatar for training and joint exercises. The two countries also promised greater bilateral cooperation between intelligence services.
Riyadh reportedly welcomed the deal to help counter Iran's growing regional influence as Turkey's military's presence will bring additional foreign muscle in the Gulf, joining the United States' Al Udeid air base in Qatar, the French naval base in Abu Dhabi, and the US and British naval bases in Bahrain, among others.
But the move was not unanimously accepted in the Gulf Cooperation Council (GCC). When Abu Dhabi got wind of the agreement in the wake of the 35th GCC summit in December, it was not viewed positively, with the Emirates fearing stronger Turkish-Qatari ties could reverse the regional fortunes of the down-on-its-heels Muslim Brotherhood.

A comprehensive agreement

According to the news outlet Intelligence Online, the head of Turkey's National Intelligence Organisation (Milli Istihbarat Teskilati – MIT) made multiple trips to Doha in December to cement a secret pledge that Ankara would protect Qatar from external military threats. In return, Doha would help offset Ankara's strained relations with Moscow following Turkey's downing of a Russian jet. Qatar would shore up the Turkish economy due to the loss of Russian tourists – estimated at some $3bn - as well as provide gas export guarantees if Moscow turns off the taps.
While the economic assistance is a typical sweetener by Gulf states securing bilateral agreements, it is the defence pledge that is of greatest significance. Whether the pledge has been actually signed has not been reported outside of Intelligence Online. There is no mention of it in the comprehensive agreement that was signed in December, but talks are reportedly ongoing.
“Turkey and Qatar are in the process of devising a possible 'Status of Forces Agreement'. In the deliberations that are said to be under way, the two sides would have discussed the incorporation of a casus foederis ["case for the alliance"] clause in the agreement,” said Dr Eyup Ersoy, an international relations expert at Turkey's Bilkent University.
“However, first, this clause, if agreed upon, could be confidential and may not be revealed to the public. Second, the substance of the clause, again if agreed upon, would be qualified. For example, it may read that Turkey will provide diplomatic and military assistance to the extent possible in case of armed aggression against Qatar. In other words, it may not be unequivocal and unconditional.”
As such, the agreement may not be overly different from unwritten pledges by the UK and the US to aid the Gulf states in the advent of an attack, last evidenced in the 1990 Gulf War. What is clear from the comprehensive agreement is that the Turkish base will be under Qatari control, with the possibility for Qatar to establish a base in Turkey.
While the agreement states that Turkey is to cover the Qatari base's expenses, there are no details about overall costs.
“Since the base is to be under Qatari military structure, it is simply a Qatari base put to the use of the Turkish military, so Doha will bear the financial costs of it,” said Ersoy.
If this is the case, it will follow the precedent of Qatar reportedly covering the $1bn construction cost of the US's Al Udeid air base.

Strategic goals

That the two countries have become closer through the agreement has not come as a surprise.
“Turkey has been pursuing a strategic relationship with Qatar for over a year. I don't think it was necessary to sign the deal as it was very obvious to anyone watching,” said Jonathan Schanzer, vice president for research at the Foundation for Defense of Democracies.
Ersoy however thinks the agreement was essential to provide a legal foundation and create political legitimacy to further Ankara's goals in the Gulf, even if the "Status of Forces Agreement" is not made public.
“In my view, the ‘real’ motivation, from Turkey’s perspective, is to transform the regional alignment with Qatar into a tentative alliance. This military cooperation agreement is imperative for the sustainability of Turkey's strategic relations between Qatar, and by extension, between Turkey and the Gulf,” he said.
The two states had found a common cause in meddling in the so-called "Arab Spring", particularly in Egypt, where both support the Muslim Brotherhood, as well as in Syria. Their backing of the Muslim Brotherhood had invoked the ire of other GCC states, especially the UAE and Saudi Arabia.
But since the overthrow of Egyptian president Mohamed Morsi in 2013, and Riyadh last year reconciling itself with the party, Ankara is using Doha as an inroad to the rest of the Gulf.
Furthermore, Turkey is being viewed as an additional line of defence against Iran following the normalising of relations with Tehran by the West. This is considered the prime motivation for the agreement. In December, the Turkish ambassador to Qatar had told Reuters that the agreement was to face "common enemies," considered a veiled allusion to Iran.
“I don't know if the US would fight for Qatar, as the whole region is afraid that the US has sold them out to Iran. The [Turkish] soldiers in Somalia are there for formality, to show the flag, whereas in Qatar it's a real fighting force,” said Atilla Yesilada, an Istanbul-based analyst at Global Source Partners, Inc.

Common enemies

Turkey's move into Qatar, and the GCC's general acceptance of the deal is considered a form of security diversification. David Roberts, a lecturer in the Defence Studies Department of King’s College London, thinks that the Gulf has interpreted US strategy incorrectly, that the pivot to Asia is not about abandoning the GCC but rather a pivot away from Europe.
“There is perhaps a slight loss of confidence, and the US are blue in the face about it. What can they possibly do? They have invested huge amounts in Al Udeid, which has a major role in the US defence review,” he said. Indeed, since 2009, Al Udeid has been the headquarters of the US Central Command (CentCom), covering 20 countries in the region.
The US is considered to have approved the strategic alliance, not wishing to ruffle the feathers of either country in the current regional environment.
“I'd not expect to see anything from CentCom on this, given how important the Incirlik air base [in Turkey is for strikes against the Islamic State group] and the Al Udeid base is to the US,” said Schanzer.
The US is not however expected to be undermined when it comes to arms deals with Qatar or the GCC at large, with Turkey only accounting for 2.4 percent of overall sales to the GCC between 2010-14 (by comparison the US is 48.1 percent and Britain 18.6 percent), according to SIPRI figures.
“For Turkey it could be a golden opportunity to develop their military-industrial complex by cashing-in with Qatar. However, they've kind of missed the boat a bit as Qatar is cutting back on spending - the military not so much - but it's not the good old days,” added Roberts.
The training aspect of the agreement also does not appear to be of major strategic important to Qatar.
“What is this alliance about? If it is about military training with counterparts, Qatar already has the Brits and the Americans doing training. How many trainers do you need? And they already have a smorgasbord of international equipment, although it is another NATO country [Turkey] joining them. Qatar is in desperate need of one unified security document,” said Roberts.