Choking trade: What the Qatar crisis tells us about food supply risk

At the start of this month, Saudi Arabia, UAE and Bahrain imposed a regional diplomatic, transport and trade blockade on Qatar. The move is aimed at curtailing Qatar's maverick foreign policy intervention in the Middle East and North Africa region, and the Horn of Africa. Some of Saudi Arabia's regional allies, including Egypt supported the action.

Much attention has focused on the food security implications of the blockade, especially as it came into force midway through Ramadan. The embargo poses a major challenge to Qatar, as 40 percent of its food imports enter the country across the Saudi border.  In 2015, Qatar imported over $400 million worth of agricultural products from Saudi Arabia - mostly dairy products and vegetables.

However, new research from Chatham House suggests that the greatest threat to food-importing countries such as Qatar comes from reliance on one or more global trade chokepoints – maritime straits, ports and inland transport networks critical to the global grain trade -, rather than the closure of land borders.

Indeed, Qatar is much less dependent upon its neighbours when it comes to staples, such as wheat. Eighty percent of its cereal imports transit through the Strait of Hormuz and 30 percent of its wheat supply comes from Russia.

Qatar's long-term food security depends upon sea lines of communication starting in Russia's Black Sea export hubs.

En route, the transportation of grains from Russia to Qatar passes through a number of critical chokepoints, including the Black Sea, Turkish Strait, Suez Canal, Strait of Bab al-Mandab and Strait of Hormuz. All of these chokepoints border maritime states directly involved in the "Qatar crisis" including Turkey and Iran, which support Qatar, and Egypt and the Yemeni government, allies of Saudi Arabia and the UAE. 

Were any of the maritime corridors closed to shipments destined for Qatar, the political crisis would rapidly become a major food security emergency

Were any of the maritime corridors closed to shipments destined for Qatar, the political crisis would rapidly become a major food security emergency. The Qatari government has not factored in this risk. Its government has long worked on the assumption that agricultural production can be outsourced and domestic supply met through investment and acquisitions in Africa, the Black Sea and Asia. The current crisis has exposed a fundamental weakness in this approach.

	[Click to enlarge - source: Chatham House]

International trade in three crops - maize, wheat and rice - is growing, and pressure on chokepoints is increasing. The MENA region is particularly vulnerable to chokepoint disruption: Dependence on imports is among the highest in the world, and the majority of these must pass through at least one of four maritime chokepoints that link the region to major supply hubs.

Food demand in the region is rising rapidly, driven by a growing population, but the region's aridity means its prospects for meeting this demand through domestic production are slim.

International trade in three crops - maize, wheat and rice - is growing, and pressure on chokepoints is increasing

Chatham House's first-of-its-kind analysis identifies three types of risk: Weather and climate; security and conflict; and political and institutional hazards. The latter two are directly relevant to the Qatar crisis, and arguably pose a long-term threat.

Shipments from Qatar's three cereal trading partners  - Australia, Russia and India - are all at risk of delay should the Strait of Hormuz be obstructed for any reason. Although deliberate closure of the Strait is unlikely, it does remain a possibility. 

Meanwhile, a third of Qatar's wheat imports must transit both the Bab al-Mandab Strait and the Suez Canal. The Strait of Bab al-Mandab is a notoriously high-risk area for piracy and now lies in the midst of the Yemen conflict.

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The risk of interruption to trade through the Suez Canal is low: This critical corridor has been subject only to rare and short-term restrictions on transit. Yet the past few years have seen a number of attempted and successful terrorist attacks, both on vessels transiting the canal and in the neighbouring Sinai Peninsula.

The deliberate closure of the Suez Canal by Egypt is extremely unlikely. Saudi Arabia may seek to pressure Egypt, but the canal is governed by the 1888 Constantinople Convention, which declares that the canal "shall always be free and open, in time of war as in time of peace, to every vessel of commerce or of war, without distinction of flag".

Perhaps the biggest risk that Qatar faces during this blockade is the response of Russia to the breakdown in regional relations. Russia has proved willing to impose official and de facto export controls when its own food supply is threatened; the uprisings across North Africa and the Middle East in 2010-11 are testament to the inflammatory effect that a halt on Russian wheat exports and the consequent spike in the price of bread can have when social unrest is already building.

The Strait of Bab al-Mandab is a notoriously high-risk area for piracy and now lies in the midst of the Yemen conflict

Russia enjoys good relations with both Saudi Arabia and Qatar but if push came to shove, Putin would be more likely to support Saudi Arabia over Qatar, given its quest for strategic relationships in the Gulf.

In the short term, Qatar's food supply looks likely to be shored up by Iran. But, in the longer term, the blockade points to an urgent need for Qatar - and other import-dependent countries - to manage the risk of a serious and prolonged disruption to key chokepoints along supply routes.

In the wake of the blockade, it is likely that Qatar will pursue its ambitious plans for domestic production with renewed verve. But, as an extremely resource-stressed region that will see rising temperatures and increasing aridity, Qatar should not put all of its eggs in this optimistic basket.

Qatar will need to diversify its supply sources and consider investing in production, storage and export infrastructure in emerging producers, such as those in East Africa. More importantly, Qatar will need to find a way to rebuild relations with its neighbours. Unilateral strategies to manage chokepoint risk will have limited success for a country that is, to all intents and purposes, landlocked, and dependent almost entirely on trade through a narrow strait for its most basic food supply.

Chatham House's new research points to the likelihood of more frequent, more severe and coincident disruptions to trade chokepoints and grain production hubs across the global food system, partly driven by climate change.

If the recent diplomatic fracas worried Qatar's leaders, they should consider how much worse it could get – and act to prevent it

In the face of growing systemic risk, Qatar's interests - and indeed those of the GCC more broadly - lie in championing regional strategies to manage supply risk and mitigate the impacts of inevitable disruptions.

Supporting the construction of the long-mooted GCC regional railway that would link it to key import hubs on the Red Sea and Omani coasts would be a place to start. Establishing regional stock-sharing agreements would also be prudent; as would working with other chokepoint-reliant countries to call for the designation of UN food security corridors that would protect vital food supplies against disruption in the event of a regional or unilateral blockade.

The time to act is now, as some of these efforts will take time to take effect. If the recent diplomatic fracas worried Qatar's leaders, they should consider how much worse it could get – and act to prevent it.

On the other side of the blockade, Saudi Arabia, the UAE, Bahrain and Egypt should reflect on their own vulnerabilities. Their reliance on the same handful of trade chokepoints currently providing a lifeline to Qatar, points to shared insecurities that threaten the wider region's food security and that will require cooperative management.

Chatham House's report Chokepoints and Vulnerabilities in Global Food Trade is released today.


Laura Wellesley is a research associate in the Energy, Environment and Resources department at Chatham House. She works across issues relating to food security and climate change. Follow her on Twitter: @LWellesley_CH

Neil Quilliam is a senior research fellow with the Middle East and North Africa Programme at Chatham House and project director of the Syria and Its Neighbours policy initiative. Follow him on Twitter: @NeilQuilliam1
 

Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, al-Araby al-Jadeed, its editorial board or staff.