The Impact of Russia’s Invasion of Ukraine in the Middle East and North Africa

The war in Ukraine that followed the Russian invasion is still in its early stages. While it is too soon to measure the war’s full impact on crises in the Middle East and North Africa, it is clear that the repercussions will be multidimensional. For now, its effects are limited in the military sphere, but noticeable in the political realm as conflict actors reposition themselves vis-à-vis one another and the outside world. For the region’s economies and its already strained social contracts, the consequences may be devastating.

Some Middle Eastern and North African countries are heavily dependent on food and energy imports, leaving them particularly vulnerable to economic shocks as a result of the Ukraine crisis. Several countries buy large amounts of wheat from Ukraine and Russia. While some, like the Gulf Arab states, have ample reserves, others, like Lebanon, have none, making the prospect of shortages very real. While, for now, no one has imposed sanctions on imports of Russian grain, importers are finding it increasingly difficult to purchase grain from Russia due to difficulties in transferring funds to Russian companies and insuring ships. Dependence on imported oil and gas is also a problem. Countries that are self-sufficient or even export hydrocarbons such as Israel, Egypt, Iran, Iraq, Libya and some of the Gulf Arab states may remain shielded from recession, whereas others like Lebanon, Palestine, Jordan, Yemen and Tunisia will face economic difficulty with the populations suffering greater privation.

The ballooning cost of oil and gas itself may have the knock-on effect of raising transport and thus commodity prices across the board, creating inflationary pressures and potentially disrupting supply chains for essential and non-essential goods that will further unsettle already fragile economies. In addition, the rising oil price will force oil-poor countries to lower the exchange rate for their national currencies, further depressing incomes and worsening living conditions. It is not implausible that the region witnesses another eruption of social unrest and even conflict as a result of economic hardship and governments’ inability to adequately address it.

Politically, much is in flux. Throughout the region and within countries mired in civil war, political actors are mostly shying away from overt alignment with either the Russian or the Ukrainian/Western side, preferring for now to hedge their bets. Only the Iranian and Syrian governments, as well as Hizbollah in Lebanon and the Huthis in Yemen, have expressed solidarity with Russia. Their opponents engage in a slackline balancing act, making nice with both Russia and Western countries and even trying to stake out a mediating role, as Israel has done. Acquiescence to Western policy preferences, such as the UN General Assembly vote condemning the Russian invasion, often resulted from Western diplomatic pressure – as in the cases of Egypt and the United Arab Emirates – rather than genuine, voluntary agreement. Meanwhile, diplomatic weariness or donor fatigue have already diminished attention to crises in the region such as the Israeli-Palestinian conflict, the Lebanese economic implosion, the growing threat of famine in Syria or Yemen’s humanitarian catastrophe. These crises are likely to draw even less interest from international actors preoccupied with the urgent events unfolding in Europe.

On the military front, little has happened as yet to overturn the applecart, but it may be just a matter of time before something does. Russia’s power projection in the region has been limited to Syria and, indirectly through the Wagner Group’s parastatal contractors, Libya. In Syria, Russia’s understanding with Israel about the latter’s freedom of movement in targeting Iranian and Iranian-backed assets remains in place, and while some Wagner fighters in Libya appear to have returned to Russia, others are staying put on their bases. But changes could trigger first- and second-order effects of greater magnitude, reinforcing pre-existing conflict dynamics such as escalating military confrontations between Iran and Israel in theatres spanning the region.

In the following roundup, Crisis Group analysts take a closer look at how governments and other political actors in the Middle East and North Africa (presented in alphabetical order) are positioning themselves in response to Russia’s Ukraine invasion.

        Algeria
        Egypt
        Gulf Arab states
        Iran
        Iraq
        Israel
        Jordan
        Lebanon
        Libya
        Morocco and Western Sahara
        Palestine
        Syria
        Tunisia
        Yemen

Algeria

Algeria is less exposed than other North African countries to the economic impact of the Russian invasion of Ukraine, because these two countries account for only 3 per cent of its wheat imports. According to the agriculture ministry, national stocks will be sufficient to meet domestic demand until January 2023. In addition, Algeria is a major hydrocarbon exporter and rising oil and gas prices will compensate for the rising food bill.

On the diplomatic front, Algeria has come under Western pressure to distance itself from Russia. In recent weeks, the U.S., Italy and Spain asked the Algerian authorities to increase natural gas exports to Europe, which is looking to reduce its dependence on Russian gas. President Abdelmadjid Tebboune seems inclined to accept, but on condition that the U.S. and Europe do not interfere with Algerian purchases of Russian weapons and military equipment, and that European governments refrain from supporting the Moroccan position on the Western Sahara conflict.

On 2 March, Algeria abstained on the UN General Assembly resolution condemning the Russian invasion of Ukraine and on 7 April it voted against the resolution suspending Russia from the Human Rights Council. It argued that UN mechanisms were necessary to investigate human rights violations on the ground in a neutral, impartial manner in order to bring justice to all victims.

Egypt

Egypt is particularly vulnerable to the economic and political shocks from Russia’s Ukraine invasion. The world’s largest wheat buyer, Egypt is dependent for about 80 per cent of its imports on Russia and Ukraine. War-related disruptions mean that the government faces a complex challenge, having to look for new suppliers while trying to absorb the blow of rising food prices. Reports indicate that unsubsidised bread prices rose by as much as 50 per cent since the start of the invasion, while the higher cost of corn (used for fodder) is fuelling inflation in prices of meat and farmed fish. In addition, Russian and Ukrainian visitors generally account for one third of total arrivals to Egypt; any significant reduction will harm the tourist industry, which is a prime source of both employment and hard currency.

The government has adopted emergency measures to cushion the immediate impact of rising food prices, but the wider economic implications remain unclear. The authorities banned exports of key staples such as wheat, fava beans, lentils and pasta, and offered incentives and new regulations for domestic wheat producers in an attempt to boost local supply. In addition, President Abdelfattah al-Sisi imposed a cap on the price of unsubsidised bread. The pain of the price hikes for the general population should thus remain limited for now. But higher import prices and lower tourism revenues are likely to widen the current account deficit. In late March, the authorities raised interest rates and devalued the exchange rate to bridge this gap, and in April Saudi Arabia deposited $5 billion at the Egyptian Central Bank and pledged $10 billion in investment, Qatar offered $5 billion in investment, and the UAE promised to buy $2 billion worth of shares in locally listed companies. Yet the currency depreciation is likely to erode the income of middle- and lower-class Egyptians, in particular, who are already struggling under present circumstances.

” Worsening living conditions could push people to spontaneous rioting. “

Repression of opposition movements means that any organised attempt to challenge government policies is unlikely to succeed, but worsening living conditions could push people to spontaneous rioting. Widespread unrest could even expose existing fractures within the security forces.

Egypt is in a delicate diplomatic position on the Ukraine crisis. In the invasion’s immediate aftermath, Cairo refused to condemn Moscow, trying to stay neutral. Since Sisi’s rise to power, Egypt and Russia have had excellent relations, as exemplified by the annual “2+2” meetings between the two countries’ foreign affairs and defence ministers. Egyptian authorities have relied on Russian arms and military equipment in an effort, in particular, to reduce the country’s dependence on the U.S. in this domain. These increasingly close ties are also a result of Cairo’s complex and fluctuating relationship with Washington, which has been negatively affected by tensions over human rights violations, among other issues.

Nevertheless, Egypt has come under increasing U.S. and European pressure for its neutral stance on the Ukraine war. In early March, the G7 ambassadors in Cairo issued a joint statement asking the government to vote in favour of the resolution condemning the Russian invasion at the UN General Assembly. Egypt complied with the request. Immediately after the vote, the U.S. announced its intention to sell F-15 fighter jets to Egypt, prompting military analysts to speculate that Cairo could cancel its previous decision to buy Russian Su-35 planes. Yet, the following week, Sisi and President Putin discussed continuing bilateral cooperation on a number of projects, in a signal that Cairo is not ready to cut its ties with Moscow.

Gulf Arab states

As oil and gas exporters, the Gulf Arab states stand to reap a windfall from the increase in oil and gas prices as a result of the Ukraine crisis. Saudi Arabia, for example, needs the price of crude oil to be slightly less than $70 a barrel to balance its budget. After the invasion, the price shot up to over $130 a barrel, before settling at somewhat less than $100, then rising again following U.S. President Joe Biden’s ban on Russian oil imports. For Gulf leaders, the price increase is welcome, as government income had been shrinking amid the COVID-19 pandemic. At the same time, with their small populations, high per capita income and large grain storage facilities, the Gulf Arab states have more buffers than many other countries protecting them from supply shocks and price increases in agricultural commodities. The UAE, Qatar and Oman import major volumes of wheat from Russia and Ukraine, but they and their neighbours have much less reason to worry than, say, Egypt or Lebanon.
” The rising oil price led the U.S. to press the Gulf Arab states to increase production, something they have resisted. “

The rising oil price led the U.S. to press the Gulf Arab states to increase production, something they have resisted. Despite heavy lobbying from the Biden administration in the weeks following the invasion and a visit by UK Prime Minister Boris Johnson to both Saudi Arabia and the United Arab Emirates, the two countries stuck to their previous production commitments. The Saudi crown prince, who refused to take a telephone call from Biden, said the kingdom was committed to the OPEC+ agreement with Russia, which limits production increases to 400,000 barrels a day per month. The UAE was less categorical. Yousef al-Otaiba, Abu Dhabi’s ambassador to Washington, said the UAE would push OPEC to consider higher production levels. This statement by itself helped bring the price down, but the UAE has yet to deliver. Instead, the Emirati energy minister, Suhail al-Mazroui, said the UAE remained committed to OPEC+. Meanwhile, Qatar has shown willingness to help European countries wean themselves off their energy dependence on Russia, signing a gas deal with Germany.

The crisis left the Gulf Arab states in a difficult diplomatic position. They have mostly adopted an ambiguous position on the Russian aggression in Ukraine, urging both sides to show restraint. Gulf Arab governments are close U.S. partners, but most have forged stronger ties with Russia in an effort to diversify their foreign relations and hence are unwilling to openly antagonise either side. At first, Qatar and Kuwait carefully called for a diplomatic solution that would recognise Ukraine’s territorial integrity. It was only a month into the conflict that Qatar provided a platform to Ukrainian President Volodymyr Zelenskyy at its annual Doha Forum – an uncharacteristically bold step by Gulf standards.

As for Riyadh and Abu Dhabi, their response to the Ukraine crisis has unfolded against the backdrop of growing frustration with the U.S., their closest security partner. They perceive an inexorable U.S. disengagement from the region and have come to see the U.S. as unreliable. The UAE’s emphasis on its growing strategic partnership with Russia as the invasion was unfolding, coupled with its abstention in the UN Security Council vote on the resolution condemning the Russian invasion and Crown Prince Mohammed bin Zayed’s reported refusal to take a call from Biden reflects this feeling. (The UAE’s abstention was linked to a UN Security Council resolution three days later that included UAE-proposed language labelling the Huthis in Yemen as a “terrorist group”, which went through thanks to Russia’s abstention.) The U.S. appears to have worked hard to get – and eventually succeeded in getting – all the Gulf Arab states behind the first and second General Assembly resolutions on Ukraine, on 2 and 24 March, respectively (they voted against the 7 April resolution suspending Russia from the Human Rights Council). While no Gulf country wants to give the impression of siding with Russia, for fear of irking the West, Saudi Arabia and the UAE have not hesitated to show their exasperation with the U.S. during this crisis.

Iran

Russia accounts for only 2-3 per cent of Iran’s non-oil foreign trade. The dominance of agricultural goods in Iran’s imports, however, is significant given the growing importance of wheat purchases as a result of droughts hampering domestic production. If this trend extends into 2023, Iran’s dependence on imported wheat will grow, raising concerns about the adverse impact the Ukraine war could have on the country.

As a permanent UN Security Council member, Russia is involved in the Vienna negotiations aimed at bringing the U.S. and Iran back into mutual compliance with the 2015 nuclear agreement. While the negotiating countries had largely shielded these talks, which began in April 2021, from external developments, the Ukraine invasion appeared to briefly change Moscow’s calculus. Instead of continuing to mostly insulate the Iran nuclear talks from disagreements with the West, Foreign Minister Sergey Lavrov on 5 March asked the U.S. for assurances that Western nations’ Ukraine-related sanctions would not impede Russia’s “free and full-fledged trading, economic, investment, military and technical cooperation with Iran” – a sweeping set of requirements well beyond the parameters of discussions specific to the nuclear deal, or Joint Comprehensive Plan of Action (JCPOA). The shift to a spoiler role seemed to portend an attempt by the Kremlin to delay the return of Iran’s oil to the market or scuttle the diplomatic process entirely.

Following a pause in the talks starting on 11 March, and bilateral negotiations between Tehran and Moscow, Russia appeared to shift its position to a narrower framing, however, specifically addressing cooperation on civilian nuclear projects in Iran and the removal of enriched uranium stockpiles exceeding the deal’s limits, which the U.S. has indicated would not be subject to sanctions, as they are part of the JCPOA.

” If the negotiators succeed in reviving the JCPOA, Iran’s oil would add 1-1.5 million barrels per day to the world market. “

If the negotiators succeed in reviving the JCPOA, Iran’s oil would add 1-1.5 million barrels per day to the world market. The extra oil would help curtail global prices that have risen precipitously since the Ukraine invasion began. Meanwhile, Iran is seeking opportunities for trade with Russia notwithstanding sanctions.

In the medium term, it is unclear how Russia’s war in Ukraine will affect its presence and cooperation with Iran in support of the Syrian government. There has been no indication so far that anything has changed with the deconfliction mechanism that Russia and Israel have used to avoid entanglements in the course of regular Israeli airstrikes on Iranian and Iran-linked targets in Syria. On 27 February, the Russian embassy in Israel stated to the contrary that “this mechanism has proven to be useful and will continue to work”. There is a chance that Moscow will use its military presence in Syria as leverage in its relations with Iran or Israel. Should either country join the anti-Russian bloc following the Ukraine invasion, Moscow might consider halting security cooperation with it over Syria. For Iran, that development could translate into more casualties and material damage, and for Israel, compromised freedom of operations. For now, there is no evidence that the needle has moved in that direction.

Iraq

Protests have broken out in several southern provinces over the past month due to price increases in basic food items such as cereals and sunflower oil, both of which Iraq imports from Ukraine and Russia, though unlike some other countries in the region, it is not entirely dependent on either. Due to global price increases, Iraq’s cereal import bill is expected to rise almost threefold, from $900 million in 2020-2021 to $3 billion in 2021-2022. The effects of the Ukraine war also coincide with those from a severe drought during the 2021 harvest, when 37 per cent of farmers experienced crop failure, forcing the government to purchase more wheat from abroad. Iraq’s inefficient food distribution programs have exacerbated these problems. Under the public food rationing system, the government purchases wheat and distributes it to private millers, then buys the flour from them, often at an inflated price, and hands it out to vulnerable families for free. While rationing may alleviate the immediate needs of the poorest Iraqis, the government can comfortably afford the increased food bill only if global oil prices remain high. Should oil prices plummet, authorities in Baghdad may be forced to reduce other expenditures such as public-sector salaries, which could prompt civil unrest.

Iraq is almost entirely dependent for its income on crude oil sales. The fact that it processes so little domestically is its Achilles’ heel, however, and increasing global energy costs have had uneven effects in different parts of Iraq. While the government has maintained the same price for fuel through subsidies in central Iraq, prices doubled in the Kurdistan region, causing queues at gas stations there, as well as in neighbouring cities such as Mosul.

The impact of the Ukraine war is noticeable politically as well. While Iraq, like many other Arab countries, refrained from taking sides in the conflict, divisions exist among the two main blocs that emerged from the October 2021 elections. Some within the winning tripartite alliance, which includes the Sadrist movement, the Kurdistan Democratic Party and the Sunni Sovereignty Alliance, acknowledged Russian aggression, while the Shiite Coordination Framework, composed mainly of Iran-aligned parties, is more sympathetic to Russian security concerns about NATO. Reflecting the influence of the pro-Iran lobby, Iraq abstained in the UN General Assembly vote on 2 March condemning the Russian invasion. It voted in favour of the second resolution on 24 March that demanded aid access and humanitarian protection in Ukraine, but only after strong U.S. and European pressure; and abstained in the 7 April vote that suspended Russia from the Human Rights Council.

In the Kurdistan region, relations are somewhat more complex. The Kurdistan Regional Government (KRG) has long been considered much closer to the West than the leadership in Baghdad. But while the KRG relies on Western military and political support for its security, it is also indebted to Russia for its 2016-2017 bailout investments, when the KRG faced bankruptcy. Since that time, the Russian energy firm Rosneft has acquired a 60 per cent stake in the region’s main oil pipeline. Moreover, unlike Western countries, Russia did not oppose the KRG’s September 2017 independence referendum; in turn, KRG officials have struck a conciliatory tone toward the separatist-held areas of Ukraine. In addition, the Iraqi federal supreme court recently ruled against the KRG’s independent oil sales. The KRG may now have to cede to the federal government some control over its deals with other international oil companies, while having to divest from Russia due to Western sanctions, if Western countries insist on compliance.

Israel

Economically, Israel is largely gas-independent thanks to its large Mediterranean gas fields and is even considering sending liquified natural gas to Europe, though the volume would be limited. Yet it faces rising prices for flour, as it imports half its wheat from Russia and another 30 per cent from Ukraine. Russia is also Israel’s main supplier of coal for electricity generation; buying coal from other sources will raise the cost.
” Israel has tried to play both sides in this conflict: strategically aligned with the West but staying mostly neutral on Russia’s Ukraine invasion. “

Israel has tried to play both sides in this conflict: strategically aligned with the West but staying mostly neutral on Russia’s Ukraine invasion. It has been careful not to alienate Moscow for fear that doing so could limit its freedom to attack Iranian assets in Syria, which it has done regularly for years through airstrikes targeting weapons shipments and facilities aimed at preventing further Iranian entrenchment in Syria and arming Hizbollah in Lebanon, and out of concern for Jews in Ukraine and Russia. Israel is also keen to protect its ties to Russian Jewish oligarchs with investments in Israel. Building on this ambivalence, Prime Minister Naftali Bennett refrained from publicly condemning Russia, though his foreign minister, Yair Lapid, who as a ruling coalition partner is expected to take over as premier in August 2023, did denounce the invasion and called the massacre in Bucha a war crime. Bennett has put himself forward as mediator, so far with little concrete result, though arguably he is earning himself credit as a world statesman.

While Israel voted to condemn the Russian invasion at the UN General Assembly and joined the bloc of countries that suspended Russia from the Human Rights Council, it did not follow the West in imposing sanctions. It has refused to provide anything other than humanitarian aid to Ukraine. It faced U.S. criticism for this approach and President Zelenskyy expressed his displeasure with Israel’s refusal to impose sanctions or supply arms when he addressed the Knesset via Zoom on 20 March. It also came to light that Israel refused to sell Ukraine the Pegasus spyware the latter had requested in 2019, for fear that it would be used against Russia and thus damage Israel’s relationship with the Kremlin. This news was noteworthy, as Israel had previously provided the spyware (now blacklisted by the U.S.) to foreign governments that used it to repress dissent.

Jordan

Amman voted in favour of the two UN General Assembly resolutions in March related to the Ukraine crisis, but abstained from the Assembly vote suspending Russia from the Human Rights Council. Jordan is not heavily dependent on either Russia or Ukraine, obtaining its food and fuel mainly from other sources. The government announced the country has reserves of grain sufficient for nine months, which it said should buffer the country from the ill effects of global supply chain disruptions.

Jordan is seeing price increases, which are causing particular hardship during Ramadan, but these are due to profiteering by traders. The government has tried to tackle this problem by capping prices for key commodities such as rice, cooking oil and gas, and subjecting any violators to penalties. The government is also partially subsidising these goods to forestall inflation when global commodity prices rise. A jump in gasoline prices expected in April did not take place. Heating gas, sold per litre, has gone up in price by 6 per cent, while the government has fixed the price of cooking gas. Overall, the impact of the crisis on the Jordanian economy has been limited thus far.

Lebanon

Lebanon imports more than 80 per cent of its grain from Ukraine, leaving it vulnerable to price shocks. The country also lost about four fifths of its storage capacity in the 2020 Beirut port blast, which destroyed the country’s main grain silos. The remaining facilities (in the port of Tripoli and in silos owned by the country’s millers) barely hold one month’s worth of consumption. Grain is among the few commodities still subsidised, at a cost of $20 million per month, as the Lebanese Central Bank provides grain importers with U.S. dollars at a highly preferential rate (1,500 Lebanese lira to the dollar), as opposed to 22,000 lira to the dollar on the bank’s own exchange platform in early April. As a result, since the beginning of the financial crisis in 2019, bread prices have increased by only a factor of six, despite the depreciation of the local currency against the U.S. dollar by a factor of fifteen and the fact that Lebanon imports all inputs for bread production (wheat, energy, sugar). Rising wheat prices will make the subsidy more costly.
” A rapid increase in bread prices could significantly worsen discontent, in particular during Ramadan. “

The Lebanese economy minister reportedly reached out to the U.S. and international donors for support to close the gap, but he may have a hard sell: since mid-January, the Central Bank has reportedly been spending the equivalent of $500 million per month from the country’s dwindling foreign reserves to stabilise the lira, a policy that most experts consider unsustainable and geared toward containing popular unrest in the run-up to parliamentary elections in May. A rapid increase in bread prices could significantly worsen discontent, in particular during Ramadan, when ritual celebrations surrounding the breaking of the fast at sunset already put significant strain on the household budgets of poorer sections of the Muslim population. The northern, predominantly Muslim city of Tripoli saw a severe riot in January 2021 when COVID-19 restrictions threatened the livelihoods of day labourers.

The government therefore prevailed upon the Central Bank to continue the currency subsidy, which amounts to less than 5 per cent of the money spent on defending the exchange rate. On 12 April, it decided that the continuation of the grain subsidies would be covered by funds Lebanon obtained by selling “special drawing rights”, which it received from the IMF in September 2021 as part of a general allocation to 190 member states. While these funds are technically not part of the “required reserves” that according to the Central Bank cannot be used to fund further subsidies, the decision continues the practice of the established political elites to alleviate symptoms of the crisis rather than addressing its root causes. It also obliterates assets that should be invested in a recovery program.

In early April, the Central Bank also briefly ceased issuing letters of credits to grain importers, reportedly asking the government to sign a formal loan agreement that would guarantee repayment of any amount disbursed for this purpose. The result was a temporary breakdown in the supply line, with grain shipments stalled off the coast, as importers were unable to pay their suppliers.

By contrast, a sharp increase in energy prices resulting from the Ukraine crisis would have far greater consequences. Lebanon imports all the oil and gas products it consumes at a cost of nearly $300 million per month. A 10 per cent increase in oil prices would drive up the import bill by $30 million, equivalent to the impact of a 150 per cent increase in grain prices. Early March saw the return of long lines at gas stations, as people rushed to the pumps to beat expected increases in the government-mandated price, while distributors were allegedly holding back supplies hoping for a windfall. A significant increase in energy prices could generate inflationary pressures that would ripple through the entire economy. One effect would be to increase the price for bread, because gas is needed to fire the ovens. In addition, the machinery in industrial bakeries consumes large amounts of electricity and, as a result, diesel to run generators since the state grid provides less than two hours of electricity per day. The situation may further worsen as a World Food Programme project to supply diesel to public hospitals, health centres and water pumping stations expired at the end of March, because international donors no longer want to fund it, citing concern about permanent dependence and the lack of convincing efforts on the Lebanese side to address the situation.

Lebanon condemned Russia’s Ukraine invasion and voted in support of the 2 March UN General Assembly resolution doing the same. This move was unexpected as Hizbollah, which wields strong influence in the government, sees Moscow as a strategic ally in the struggle over the regional balance of power and has come out strongly in support of Russia. The party has so far refrained from turning Beirut’s positioning in the Ukraine conflict into a contentious issue inside the government, however. It is likely that Hizbollah does not see a General Assembly vote as consequential enough to merit making a fuss; that going on the record loudly in support of Russia was good enough to score points with Moscow; and that blasting the U.S. as overbearing in trying to impose a position on Lebanon was going to play well with the party base, whereas taking the matter further would yield no additional political gains.

Libya

The war in Ukraine is already having a ripple effect on Libya’s import-dependent economy. Bread is a staple food and the country imports over 90 per cent of its wheat, half from Ukraine and Russia. The government subsidises a portion of wheat imports. Since the outbreak of the conflict, wheat prices in Libya’s domestic market have shot up, forcing a number of bakeries to close. The economy and trade minister has stated that Libya has a strategic stockpile of wheat sufficient for three months, while imports continue to arrive. Yet despite the allocation of state-subsidised wheat, bakery owners say they are no longer able to sell bread at the official price of 0.25 dinars ($0.05) a loaf. Prices of other foodstuffs such as sunflower oil, fruits and vegetables have also increased dramatically over the past month.

There have also been gasoline shortages. It may seem counterintuitive that oil-rich Libya should run out of gas, since it produces crude oil and has its own refineries. But locally refined fuel is insufficient for domestic consumption and, as a result, Libya buys most of its additional needs abroad at market prices, then sells fuel locally at heavily subsidised rates. The Libyan state has cash reserves it could use to increase its subsidies to compensate for the global rise in commodity prices, should it choose to do so. But who would make the choice? The country is once again caught in a feud between two rival governments, both of which claim to be legitimate – a Tripoli-based executive headed by Abdulhamid Dabaiba, which has been in power since March 2021, and an executive led by Fathi Bashagha, which received the Tobruk-based parliament’s confidence vote on 1 March. These two governments are at odds over which one has the authority to approve changes in budget allocations, including for subsidies, and whether they would need parliamentary approval to do so. Muddying the waters further, two other institutions – the National Oil Corporation and the Central Bank of Libya – have been at loggerheads since March 2022 over where the country’s oil sale revenues should be deposited: in the latter’s accounts, as is standard procedure, or temporarily in the Oil Corporation’s accounts. All of this wrangling, coupled with poor decision-making and endemic profiteering from subsidised goods, complicates the state’s ability to alleviate rising commodity prices.
” The war in Ukraine has deepened the rivalry between the two claimants to governing authority. “

The war in Ukraine has deepened the rivalry between the two claimants to governing authority. Moscow is so far the only foreign capital to officially recognise the Bashagha-led government. The UN expressed its reservations about the Tobruk-based parliament’s vote of confidence, citing legal controversies, while the Dabaiba-led government refused to hand over power. The lack of Libyan consensus was already troubling for countries pondering how to treat the Bashagha government’s claim. But, as one Western diplomat put it, Russia’s quick recognition was a “kiss of death”: it seems that no other capital wants to appear to be siding with Moscow in this Libyan feud for fear of irritating Washington. Not even Cairo, which is sympathetic to Bashagha, has followed Moscow’s lead. Outside parties are trying to find a compromise, partly to ensure that Bashagha’s government does not cosy up to Russia. Even Bashagha himself is keen to maintain his distance from the Kremlin. On 26 March, he met Ukraine’s ambassador to Libya, affirming his support for the Ukrainian people and saying Libyans were standing by their side “as much as we can”. The Dabaiba-led government, which from the outset condemned the Russian aggression in Ukraine, on 7 April voted in favour of expelling Russia from the UN Human Rights Council, the sole Arab delegation to do so.

European diplomats have expressed concerns about the potential military spillover of this new political alignment. The Kremlin-backed Wagner Group of private military contractors has been operating in Libya since the 2019 war, alongside forces led by Field Marshal Khalifa Haftar, who is now allied with the Bashagha government. Wagner fighters also retain access to, if not outright control of, at least two significant military bases in the centre of the country, where they are said to operate several fighter jets Russia dispatched to Libya in 2020. For now, the Ukraine war’s most visible effect appears to be the redeployment from Libya of some Wagner units and pro-Moscow Syrian fighters, whose numbers were estimated at several thousand during the 2019 war. They have allegedly gone back to Russia (via Syria). Their departure could be a positive development, as Libyan authorities had been struggling to remove foreign fighters from the country since a 2020 ceasefire agreement. Russia’s military strategy in Libya remains opaque, however. The Ukraine crisis could push Moscow to use the assets it controls in Libya in its confrontation with the West, backing the Bashagha government (and Haftar) in renewed fighting for Tripoli, though how much capital Moscow is willing or able to spare in Libya at the moment is questionable given its war in Ukraine.

Morocco and Western Sahara

Morocco is less affected by the grain crisis than most, as it imports only 20-30 per cent of its wheat from Russia and Ukraine. Overall, however, the kingdom remains vulnerable to price shocks, as it buys 40 per cent of the wheat its population consumes from abroad and recently recorded an unprecedented drought that has severely curtailed domestic production. As a counter-measure, the government tripled its budget for flour subsidies. In addition, faced with rising fuel prices, the authorities promised to provide financial support for the transport sector. Higher subsidy spending is likely to widen the budget deficit for 2022. While the government has not yet specified how it plans to fund these additional expenditures, Morocco might have to turn to the IMF or plan a new bond issuance to bridge the gap. External debt is likely to increase, though Morocco has some room for fiscal manoeuvre compared with, say, Egypt or Tunisia.

Morocco has remained neutral toward the Ukraine conflict, avoiding calling it an invasion in public statements. It also did not participate in the UN General Assembly vote on a resolution condemning Russia’s invasion and later claimed in a statement that the decision to not participate was “a sovereign decision that cannot be interpreted as a strategic misalignment or as a position contradicting international law and the states’ territorial integrity”. By not voting, Morocco avoided the dilemma it faced: frustrating its Western partners by objecting to the resolution or antagonising Russia by voting in favour. It managed to avoid public criticism from its Western allies for its position.

Rabat also seems concerned that taking a public stance against Moscow could damage its Western Sahara policy. As a veto-wielding permanent member of the UN Security Council, Russia plays a key role in the Western Sahara conflict. In recent years, Moscow has regularly abstained on resolutions related to this issue, but Russian Foreign Minister Lavrov recently expressed support for some of the pro-independence Polisario Front’s demands, including a return to bilateral talks with Rabat and a self-rule referendum. Both are unacceptable to Morocco, which wants to settle the conflict through roundtable negotiations that include Algeria – a key Polisario supporter – with autonomy for Western Sahara under Moroccan sovereignty as the only possible outcome. Rabat’s skilful diplomatic handling of its relations with Russia and the West means that the Ukraine war is unlikely to have any immediate impact on the dispute over Western Sahara.

Palestine

As Palestine is inextricably linked to the Israeli economy, any repercussions of the Ukraine crisis for Israel will inevitably be felt in economic conditions in the occupied Palestinian territories. Trade with Israel accounts for between 70 and 80 per cent of all the territories’ imports and exports, and Israel mediates Palestinian access to the global economy. Any shortages or price rises that result from the crisis in Israel will thus also affect the Palestinian economy. These effects occur against the backdrop of the worst fiscal crisis the Palestinian Authority (PA) has faced since its creation in 1994, which will limit its ability to take mitigating measures to protect the most vulnerable in the West Bank. The Hamas government in Gaza will likewise be strapped, compounding an economic crisis caused by the Israeli siege and a series of devastating wars.

Hardest hit will be food security. Shortages of wheat and maize will drive up food prices. Palestine imported $10.98 million in wheat in 2020: $5.61 million from Israel, which came mostly from Ukraine and Russia, $3.57 million directly from Russia and $1.8 million directly from Ukraine. The Hamas-run Ministry of National Economy in Gaza has stated it will not allow traders to raise prices, claiming that Gaza has stockpiles of basic commodities for the next three months; but Gaza’s traders say they have already experienced shortages that have forced some of them out of business. The West Bank has seen an increase in the cost of basic foods, like poultry, following a 60 per cent hike in the cost of fodder, compared to the global increase, which stands at 14 per cent. The discrepancy arises from the fact that Israel levies import taxes on the 90 per cent of Palestine’s fodder that the PA buys in Russia and Ukraine. Retail prices for cooking and heating gas have also gone up by 6 per cent.
” The PA is financially and politically dependent on Ukraine’s Western allies but also on Russia’s humanitarian aid, so picking sides could bring negative repercussions. “

The crisis is bound to push Palestine down the priority list for donor governments, international institutions and global media. Donors may divert aid flows to ease conditions in Ukraine – creating a major challenge for the Palestinian economy, which is largely dependent on external assistance. As a side note, the swift and comprehensive international response to the Russian invasion, along with the extensive and critical media coverage, has deepened cynicism among Palestinians and their leaders about what they see as Western double standards. The PA has assumed a “positive neutral” stance. PA officials have publicly stated that, as a country under occupation, Palestine cannot afford to take sides in a conflict that does not directly affect it. The PA is financially and politically dependent on Ukraine’s Western allies but also on Russia’s humanitarian aid, so picking sides could bring negative repercussions. For its part, Hamas has taken no official position on the conflict beyond calling for an end to the fighting and highlighting what it sees as the decline of U.S. hegemony in global affairs, as well as international double standards and self-interested actions on the part of the three Western permanent members of the UN Security Council.

The PA is unlikely to experience major political fallout from the crisis, which will merely exacerbate public anger at an already unpopular and ineffective leadership. The PA security forces are mostly capable, with Israeli help, of suppressing public unrest. Absent a viable alternative to the PA, neither Israel nor its international supporters will allow it to collapse. Despite widespread cynicism among Arab audiences over Western double standards in their widely diverging approaches to the Russian invasion and Israel’s occupation, international stakeholders in the Israel-Palestine conflict are unlikely to shift either their outlook or their strategy toward it.

Syria

Eleven years into the Syrian civil war, an uneasy stalemate prevails. The Ukraine conflict’s impact on Syria remains far from clear, but there are ways it could tip the war back into more active confrontation or otherwise worsen the plight of long-suffering Syrians.

First, the Ukraine war could spell trouble for the ceasefire agreement in the rebel-held north-western province of Idlib announced by President Putin and his Turkish counterpart Recep Tayyip Erdoğan on 5 March 2020. The ceasefire has held until now, largely because Moscow has understood that if it helps Syrian regime forces push further into Idlib it will incur significant military and political costs, including jeopardising its relations with Ankara. Today, with Turkey’s drone sales to Ukraine and public criticism of the invasion, Syrians in Idlib are concerned that Moscow may retaliate by escalating actions against the Turkish military presence there, though there has been no sign so far that it intends do so. To the contrary, Russia appears keen to keep its relationship with Turkey on an even keel. How long this will last will depend on the mood in Moscow and on the tightrope both countries are walking to preserve their relationship.

Secondly, Russia may deploy to Ukraine some of its own forces in Syria or the Syrian fighters it backs, which could create security vulnerabilities in regime-held areas. While there has been no change in the Russian military posture in Syria to date, Moscow announced that it was recruiting thousands of Middle Eastern fighters for the Ukraine war, presumably also from Syria. Rumour has it that Syrians in government-controlled areas are signing up. A significant redeployment of pro-government forces could loosen the regime’s security grip on those areas, especially in central Syria where ISIS remains active. Following Russia’s 2015 military intervention, Damascus and Moscow put the anti-ISIS fight on the back burner, striving to recapture territory from the Syrian opposition instead. But after 2020, frozen internal fronts in Idlib and the north east allowed the regime and its Russian allies to refocus on fighting ISIS in central and eastern Syria. The number of ISIS attacks correspondingly fell. But a weakened ISIS could make a comeback if given space.

Thirdly, the Syrian and Russian air forces may suffer from shortages of ammunition and spare parts in the mid- to long-term, as these are typically supplied via the Russian Black Sea fleet, which is now otherwise engaged; moreover, Russian warships can no longer pass through the Bosporus or the Dardanelles, as Turkey has invoked the terms of the Montreux Convention. Syrian jets and helicopters, in particular, most of which are old and badly in need of maintenance, rely on Russian spare parts to keep flying. In the short term, air force commanders may reduce flight hours in order to preserve what they have, but soon they may find their aircraft unserviceable, reducing Syria’s warfighting capability. (See also the Israel section above.)

Fourthly, Russia could opt to act as diplomatic spoiler in Syria, dealing a blow to humanitarian relief efforts. Moscow has used its veto power to block UN Security Council resolutions on Syria in the past, but in 2014 it helped pass Resolution 2165, allowing the UN to designate four border crossings to deliver aid from neighbouring countries into opposition-held areas without approval from Damascus. Since then, Russia has increasingly backed regime efforts to restrict such cross-border humanitarian access, gradually blocking the UN from using all but one crossing. The latest UN resolution keeping the final crossing from Turkey into north-western Syria open will expire in July. Given tensions over Ukraine, it seems increasingly likely that Moscow will block a Western push to renew the resolution, with potentially disastrous consequences for the local population, who will be at risk of losing the humanitarian and medical assistance they desperately need.
” The Ukraine conflict could worsen Syria’s already dire food insecurity. “

Finally, the Ukraine conflict could worsen Syria’s already dire food insecurity. In 2021, the World Food Programme estimated that 60 per cent of the Syrian population were food insecure. The country imports roughly two thirds of both the food and oil it consumes, and most of its wheat imports come from Russia. The Ukraine crisis is likely to disrupt grain and oilseeds supply chains, increase food prices and drive up domestic production costs in agriculture.

Tunisia

Tunisia is a net importer of gas and oil, leaving it vulnerable to global price increases. While it meets 50 per cent of its domestic gas needs through national production, it purchases the rest from Sonatrach, an Algerian company, at market prices and receives 5 per cent as royalty payment for the Trans-Mediterranean Pipeline’s passage through Tunisian territory. Tunisia pumps about 30 per cent of the oil it consumes from its own wells, importing the rest at market prices. Each $1 increase in the oil price results in an additional cost of approximately $40 million for the government budget. The 2022 budget law was based on an oil price of $75 per barrel. With crude now selling for $100 per barrel, the cost of energy imports will rise from $1.6 billion in 2019 to an estimated $4 billion in 2022, which also includes gas and other fuels. President Kaïs Saïed’s government has been forced to raise fuel prices monthly, which feeds other inflation as well as public discontent. It has already hiked prices several times by a few percentage points on each occasion.

Tunisia’s food imports are a further source of concern. The country produces between 70 and 90 per cent of its domestic demand for durum wheat and between 10 and 30 per cent of its consumption of soft wheat (for flour for bread, a key staple of the national diet). Imports from Ukraine account for nearly 50 per cent of total wheat imports, while an additional 4 per cent come from Russia. The government confirmed that wheat stocks will cover national demand until June, but shortages have already been happening sporadically since January, before the Russian invasion.

In addition, the state-owned Cereal Board’s debt to Ukrainian exporters is about $300 million. Ukraine demanded an up-front cash payment of 50 per cent of the total arrears for the past six months. There are reports that several ships loaded with wheat from Ukraine and headed toward Tunisia will not be able to deliver their cargo because the Tunisian government cannot afford this sum. As a result, there is a risk of major wheat shortages before the June harvest in Tunisia. On 24 March, French President Emmanuel Macron, supported by the G7, launched the Food and Agriculture Resilience Mission, which aims to prevent famine risks, especially in Tunisia and Lebanon, by minimising trade disruptions and boosting domestic production.

In the near to medium term, the worsening of social misery and especially the risk of shortages of basic necessities are likely to make Tunisians more receptive to the polarising discourse of pro- and anti-Saïed activists. This situation could pose serious security challenges for the authorities, including in the form of riots and proliferating crime. A quick downturn in the president’s popularity is also possible, isolating him and potentially leading to chronic political instability.

Yemen

Yemen received a reprieve in early April when the UN announced a two-month truce and Gulf Cooperation Council-led negotiations led to a handover of power within the internationally recognised government and pledges of more than $3 billion to stabilise the economy. The formation of a new presidential council, which assumed the prerogatives of President Abed Rabbo Mansour Hadi, and the injection of funds led to a rapid improvement of the Yemeni riyal’s value in nominally government-controlled areas from more than 1,000 to around 680 riyals to the dollar. The stronger riyal will increase Yemenis’ purchasing power at a time when they are suffering one of the world’s largest humanitarian crises. The UN has reported that the number of people in need of humanitarian assistance rose from 17.4 to more than 19 million people in 2021.

Developments in Ukraine put a damper on the good news, however. Disruptions of Ukrainian wheat exports and the broader price spikes on global commodity markets since early February have already had a significant impact in Yemen. Traders warn that Yemen imports around 40-50 per cent of its wheat from Ukraine and Russia. Yemenis are struggling to secure alternative supplies, with only around four months of wheat reserves on hand. Yemen is also a major fuel importer. As a result, fuel and wheat prices have already risen across the country. The impact has been particularly severe in areas controlled by the rebel Huthi group, where gasoline prices have risen by more than 50 per cent since early February. Fuel prices have increased across the country since the beginning of Ramadan.
” If the country returns to active conflict, the outlook for ordinary Yemenis is bleak. “

Higher prices on international markets mean that, if they are to maintain present import levels, traders will need around 40 per cent more hard currency on hand to underwrite the increased cost of goods. Much of Yemen’s hard currency supply comes from workers’ remittances, which could fall in the coming months given the mounting cost of living in Saudi Arabia, a major importer of Russian and Ukrainian wheat. The hard currency shortfall is likely to deepen Yemen’s balance of payments crisis. For these reasons, political unrest is likely. Government-held areas witnessed a wave of protests in 2021. If the situation in these areas does not improve under the new leadership, more protests can be expected. Although many people in Huthi-controlled areas are frustrated and even desperate over the economic situation, the rebels operate a police state that does not tolerate, and is capable of suppressing, dissent.

Yemen quickly became a collateral target in horse trading at the UN Security Council in the invasion’s wake. The UAE, a major backer of the Hadi government, abstained from a Security Council resolution condemning Russia’s aggression. Three days later, as part of a wider agreement, Russia voted for a resolution that included UAE-proposed language labelling the Hadi government’s Huthi adversaries as a “terrorist group”. Diplomats in New York noted that Russia’s yes vote marked a substantial shift in its position. Previously, the Russian mission had repeatedly threatened to veto similar language directed at the Huthis and called for more “balance” in statements and resolutions. Whatever Russia’s intentions, however, it appears to be happy to allow renewed efforts to sustain a truce in Yemen and move toward political negotiations. The shifting Russian position at the UN has not had a noticeable effect on the Yemen war’s internal or regional dynamics.

With the truce still holding, all eyes are on UN Special Envoy Hans Grundberg, who travelled to Sanaa to meet the Huthi leadership on 11 April. If he can negotiate an extension of the truce and even help launch political talks, it may be possible to ward off some of the worst effects of the Ukraine crisis on the cost of living. But if the country returns to active conflict, the outlook for ordinary Yemenis is bleak. The UN faces a major humanitarian funding shortfall in 2022-2023, as it did in 2021-2022, when it had to reduce its coverage by about a third. Hunger has been driven by falling income and rising prices. With attention shifting to Ukraine, there will likely be less interest in the UN’s humanitarian appeal for Yemen, which raised just $1.3 billion of the hoped-for $4.27 billion when it was launched in March 2022.

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