Apprehension as Russia stalls grain deal, awaits positive response from UN on own products

Admin I Monday, July 17, 2023

MOSCOW – The Grain deal brokered by Turkey and the United Nation for Russia to allow shipment of grains from Ukraine through the Black Sea is due to expire on Monday, July 22, 2023 and there is no guarantee that Russia will extend the deal fueling speculation about the return of high prices of grain that characterised the pre-grain deal era after invasion of Ukraine by Russia.

Agreements on the export of food and fertilizers from Ukraine to the international markets were concluded on July 22, 2022 in Istanbul for 120 days. One of the agreements regulates the order of grain supplies from the Kiev-controlled ports of Odessa, Chernomorsk and Yuzhny controlled by Kiev.

In addition, a memorandum was signed between Russia and the UN, which implies the obligations of the world organization to remove various restrictions on the export of Russian agricultural products and fertilizers to world markets.

The grain deal has been repeatedly extended, the last time – on May 17 for 60 days. The Russian Foreign Ministry previously stated that the Russian part of the agreement is not being implemented.

In particular, Russia has insisted on restoring the access of its ships to foreign ports, normalizing the situation with the insurance of dry cargo ships, and reconnecting the Russian Agricultural Bank to the SWIFT interbank payment system.

Undermining the ammonia pipeline Tolyatti – Odessa by the Ukrainian side seriously complicated the situation and put an end to talks about resumption of its work.

On July 13, President Vladimir Putin said that Russia can suspend participation in the grain deal until all promises given to it in such agreements are fulfilled.

“We can suspend our participation in this deal. And if everyone reiterates that all promises given to us will be fulfilled – let them fulfill these promises. And we will immediately join this deal. Again,” Putin said.

The variant of “extension first and fulfillment of promises after that” is not suitable for Russia anymore, the President stressed. “Fulfillment of promises to be at first, followed by our participation,” the head of state said.

Turkey is making active efforts to keep the grain deal. In turn, Kiev advocates that the deal be not only extended for a longer period, but also expanded. On July 8, at a press conference following talks with Turkish leader Tayyip Erdogan in Istanbul, President of Ukraine Vladimir Zelensky called for the extension of the initiative, without taking into account the position of Russia.

Shortly before the expiration of the grain deal, the Istanbul-based Joint Coordination Center (JCC), which includes representatives from Russia, Ukraine, Turkey and the UN, confirmed Moscow’s claims that the Black Sea initiative is not providing the countries in need with the necessary volumes of food.

According to JCC, low-income countries received only 10% of corn and 40% of wheat under the grain deal, most of the products go to developed countries.

JCC admitted that the export of Russian ammonia fertilizers under the grain deal concluded a year ago was not launched. Meanwhile, UN Secretary General Antonio Guterres sent a letter to Russian President Vladimir Putin on July 11 with proposals for the implementation of the Russian part of the grain deal. Guterres refused to disclose the details of the letter.