Tuesday August 4, 2009

I'm Predicting:

Syria and France are in serious conflict.
This conflict is almost as serious as the rift that was only recently repaired, the rift that began on February 14, 2005 with the assassination of Rafik Hariri of Lebanon.

This time it is all about wheat.
About 21 tons of wheat from France that is sitting in the port of Tartus in Syria.

The French have a 150,000 ton wheat deal with Syria.
These 21 tons of wheat left France on June 4th after being inspected not once but twice by Syrian grain experts.
Four days later on June 8th when it arrived in Syria, the Department of Agriculture said that the bundle contains a dangerous fungus and they will not unload it.

The result of that decision is a significant international crisis.
President Sarkozy of France has just written a letter to President Assad of Syria saying that if the grain is not unloaded it "will likely damage future trade."

What is happening here?
I think that the Syrians want to default on or break their wheat contract with France. Instead of simply breaking the contract, they are suggesting that the product is defective.

France was the first Western country to extend a diplomatic hand to Syria and, in essence, to let them out of the doghouse.
Syria needs wheat, they were hit hard by the drought and will produce almost nothing this season, so imports are essential.
But Syria also has little to no GNP and no cash to buy the imports -that's why the Syrians are playing games with France.

This situation does not portend well.
I'm expecting the situation to backfire.

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