War in Ukraine risks causing unrest in the Middle East as bread prices soar

Russia’s war on Ukraine risks sparking civil unrest in the Middle East, analysts have warned, as global wheat supplies and harvests are disrupted and prices soar.

Wheat prices have climbed 25% since the February 24 invasion and are likely to worsen further with Ukrainian ports seized or attacked and Russia facing heavy sanctions.

Russia and Ukraine together account for about 14% of world wheat production and about 14% of world corn production.

It comes after retailers in Russia began rationing food amid concerns over hoarding, raising the possibility of queues outside shops reminiscent of the Soviet era.

BCA Research, the global macro-research company, says food is not moving out of the Black Sea region, threatening exports for which the Middle East is a key market.

He added: “This could put a strain on state grain reserves in the region, which could lead to civil unrest similar to the food riots that occurred during the Arab Spring in 2011.”

There are also fears that Russian attacks could prevent Ukrainian farmers from sowing and harvesting this year. Ukraine usually begins spring sowing at the end of February or March.

Capital Economics said Egypt is particularly vulnerable because around 90% of its wheat imports come from Russia and Ukraine.

Egypt sources from other countries, has its own crop and about four months’ worth of wheat in stock, but still faces higher prices on imports.

Subsidized bread prices are expected to rise. The Egyptian government was forced to abandon efforts to raise the prices of certain breads in 1977 after sparking riots.

James Swanston of Capital Economics said: “A major risk is that reduced subsidies and higher food inflation increase the threat of social unrest.

“These two factors contributed to the frustration of protesters during the Arab Spring uprising in early 2011.

“And rising prices, combined with the economic blow of the Covid-19 crisis, could boil over frustrations and lead to further unrest.”

Lebanon is also vulnerable to supply disruptions as it gets 40% of its wheat from Ukraine and Russia, warns Dragonfly, the risk advisory group.

The country has about a month’s supply of wheat and is already in the throes of a major economic collapse from 2019.

“Given the dire economic situation, protests and unrest related to the hardships are likely,” Dragonfly’s security and intelligence analysis department warned.