The fate of Russian grain, 6 million tons of which annually buys Egypt, was subject to political bargaining powers of the two countries. Meanwhile, Egyptian prosecutors began an investigation into the corruption related to the issuance of permits for the import of “dirty” wheat.
Stuck 250 thousand tons of grain
Egypt is the largest wheat importer in the world, so attention to its grain market chained in many countries. Especially in Russia, which sends to Egypt a third of all exported wheat (approximately 6 million tons in trade year).
In recent weeks, the Egyptian authorities have rejected already four Russian wheat weighing 250 tons. The two parties wrapped amid payment disputes with the Dubai trader AOS Trading DMCC, another due to a missed delivery time.
The Minister of supply of Egypt Ali al-Moselhi said that the authorities consider the possibility to “bypass” the trader, to buy strategically important goods directly from the original supplier.
Much more interesting was the fate of another party, weighing 63 tons: that it found 0.06 percent ergot (harmful moulds and fungi), slightly above the 0.05% limit as permitted in accordance with the “Regulation of state trading” in Egypt.
However, the Egyptian government keeps calm for the lack of grain in the country! The government has purchased 3 million tons of grain out of the projected 3.5 million — strategic reserves will allow you to feed Egypt for five months.
The fate of the cargo, which is now in the port of Safaga, it was revealed today, after the Egyptian inspectors took a second sample and conducted repeated tests in laboratories in Cairo before taking the final decision. And behold, a miracle! Re-analysis of wheat was detected in only 0.01% of ergot. If so, why this was banned?
The decision of the Egyptian authorities has caused outrage and the grain merchant — Dubai trader GTCS Trading DMCC, and the Rosselkhoznadzor. And sellers, and officials said that the grain is fully consistent with the Egyptian state specifications. Rosselkhoznadzor, meanwhile, has already sent to Cairo a group of professionals who will study the situation, said the press Secretary of the Federal Agency Julius Melano.
The fate of Russian grain became subject to political bargaining, in which Moscow also has a trump card. Now, the two countries decided to resume with June 6, imports of Egyptian potatoes. Recall that the Rosselkhoznadzor has banned it in 2015 after the parties were discovered potato rot, and here the problem is solved.
The quarantine service of Egypt has reported that Russian grain contains almost no ergot — its concentration is supposedly six times lower than what was established during the measurements in the port. Well, not wonderful?!
Time bomb
“Free press” already in detail told, what judicial and political battles in the past year unfolded in Egypt about the quality of Russian grain. Until 2016 the Egyptian Ministry of agriculture was allowed to import into the country wheat, the content of ergot which was not more than 0,05% (this is an internationally recognized standard).
However, in August 2016, the decision was reversed: the quarantine on the Egyptian Ministry of agriculture introduced a policy of “zero tolerance” in relation to imported grain. In fact, all imports of the grain in Egypt was jeopardized.
Of course, this decision has hit the Egyptian economy: dramatically decreased the number of tenders held by GASC, and began to increase in wheat prices within the country. In the Egyptian ports were frozen batch of grain is the largest agricultural traders. It was under their pressure the Egyptian government was forced in November of 2016 to pass the quarantine authority of the Ministry of agriculture to the Ministry of supply and internal trade. Then the embargo on grain contaminated with ergot, has been cancelled.
However, in November last year the administrative court in Cairo has demanded the return of the previously existing ban on the import of Russian grain contaminated with ergot. Experts predicted that the severe economic consequences of this decision are yet to be assessed. And now, apparently, the bomb exploded!
Corruption has penetrated all
Supplies of Russian grain to Egypt are carried out through the Directorate of supplies of raw materials (General Authority For Supply Commodities). This is one of the all-powerful structures in the world wheat market, which annually spends $ 1.5 billion on the purchase of grain.
The scandal with the supply constraints of wheat occurs on the background of another one — this time corrupt. Executive office of public Prosecutor of Egypt (this is the main anti-corruption body) has accused the Deputy Chairman of the management of public procurement Ahmed Yousef and another seven officials in the financial and administrative irregularities in the implementation of commodity supply.
Information about the investigation against Youssef was leaked to the Egyptian press by accident. It turns out that the investigation began in 2016, and since the Prosecutor’s office why-that was not advertised: they say, too insignificant violations: unauthorised payment of bonuses and the resolution of financial controller to attend the tenders without the required approval of the government.
Simultaneously, the anti-corruption body has arrested the head of holding company for food industries Alaa Fahmy and three officials of the Ministry of supply (the Minister is the head of the Main Department of supplies of raw materials), including his press Secretary and Advisor to the Minister responsible for relations with the Parliament.
The matter involves allegations of bribery, abuse of power, profiteering and misappropriating public funds. The details of the case prosecutors do not reveal: it is only known that Fahmy accomplices “helped” to direct public contracts to specific firms. By the way, it is possible that in this case occur and the “Russian trace”.
The corruption scandals erupt in Egypt no less than in Russia. Two years ago after a parliamentary question revealed that two million tons of wheat, allegedly imported by Egypt, existed only on paper — the then Minister of supply Khaled Hanafi was forced to resign. Although he avoided criminal proceedings. Then, by the way, Deputy Chairman of the office of public procurement was Ahmed Yousef, former head of the Central administration of procurement.
And last year the American news Agency Reuters, after its own investigation, revealed in Egypt the complex system of bribery: grain traders are actually “fed” officials, guaranteeing procurement of wheat through strict quarantine “filters”.
