Landmark Initiative to Safeguard Ukrainian Grain Exports at Risk

The landmark initiative safeguarding exports of Ukrainian grain via the Black Sea, crucial in alleviating a global food crisis sparked by the Russian invasion, has been the subject of grueling talks to get Moscow to agree to its renewal.

Set to expire late Monday, the deal brokered by the United Nations and Türkiye, signed by Moscow and Kyiv in July 2022, established a protected sea corridor allowing Ukraine’s agricultural goods to reach global markets.

Ukraine and Russia as Leading Grain Exporters

Ukraine and Russia are among the world’s leading grain exporters.

Why is the deal at risk?

Russia has repeatedly warned that it saw “no grounds” to extend the current deal, criticizing alleged obstacles to its own exports of agricultural products.

Moscow had regularly threatened to quit the grain deal, complaining that secondary effects of Western restrictions on shipping and insurance as well as banks were blocking the export of its agricultural products.

Russian President Vladimir Putin on Thursday said nothing was done to meet Russia’s demands around the grain deal and that Moscow is still hesitating to extend it.

“I want to emphasize that nothing was done, nothing at all. It’s all one-sided,” Putin said in a televised interview, adding that: “We will think about what to do, we have a few more days.”

“We can suspend our participation in the deal, and if everyone once again says that all the promises made to us will be fulfilled, then let them fulfill this promise. We will immediately rejoin this deal,” he said.

“We will extend … when promises given to us are fulfilled,” Putin noted. The Russian leader added he was ready to wait “as long as it takes.”

A Kremlin spokesperson later said that Russia had not made a final decision on whether to exit the grain deal.

On Tuesday, Russia launched a series of drone attacks that targeted grain facilities at a Ukrainian port in the Odessa region, which houses three maritime terminals key to exporting grain.

Can the deal be saved?

President Recep Tayyip Erdoğan, who brokered the deal, has insisted that work on extending it continues with both Putin and Ukrainian leader Volodymyr Zelenskyy.

“Zelenskyy favors continuing the initiative, and Mr. Putin has some suggestions,” Erdoğan told reporters Wednesday at the end of a two-day NATO summit in the Lithuanian capital Vilnius.

U.N. Secretary-General Antonio Guterres supports removing hurdles to Russia exporting its fertilizers – another element of the July 2022 deal that Moscow has regularly complained is not being respected – because of Western sanctions blocking transactions by Russia’s agricultural bank, his spokesperson said.

Guterres sent Putin a letter on the subject on Tuesday. According to Tass news agency, Putin said he had not seen the letter from Guterres proposing an extension of the deal but said Russia was in contact with U.N. officials.

Meanwhile, the European Commission is helping the U.N. and Türkiye try to extend the initiative and is open to “explore all solutions,” a European Union spokesperson said Thursday.

The EU is considering connecting a subsidiary of the Russian Agricultural Bank (Rosselkhozbank) to the international payment network SWIFT to allow for grain and fertilizer transactions, sources familiar with discussions told Reuters on Wednesday.

Rosselkhozbank was cut off from SWIFT by the EU in June 2022 over Russia’s invasion.

In the letter to Putin, Guterres proposed Moscow allow the accord to continue for several months to give the EU time to connect a Rosselkhozbank subsidiary to SWIFT, two of those sources familiar with discussions told Reuters.

During a visit to Brussels on Thursday, Guterres told reporters he had not yet received a response from Russia. He said his letter to Putin contained “concrete proposals that I hope can allow us to find a positive way forward.”

European Commission President Ursula von der Leyen later on Thursday urged Putin to extend the deal. “The ball is in President Putin’s court and the world is watching,” she said.

Has the deal worked?

By ensuring the security of maritime cargo traffic in the Black Sea – along with inspections to counter arms shipments – the deal has allowed the export of nearly 33 million tons since it entered force on Aug. 1, 2022, mostly wheat and maize.

The accord helped bring down prices that had shot higher following Russia’s invasion of Ukraine and avoid hunger and famine in countries heavily dependent upon imports.

Russia has complained that not enough reaches poor countries, but the U.N. argues that it has benefited those states by helping lower food prices by more than 20% globally. China was the biggest importer at 7.75 metric tons, followed by Spain at 5.6 million tons and Türkiye at 3.1 million tons, according to the coordination center set up in Istanbul under the accord.

The deal also enabled the World Food Programme (WFP) to provide 725,000 tons to countries experiencing crises like Afghanistan, Ethiopia, Kenya, Somalia, Sudan and Yemen.

“A lack of food supplies produces knock-on effects for the lives of millions of people, particularly the poorest,” said the U.N.

What is the current situation?

Shipments have slowed ahead of the expiration of the deal, with only seven ships leaving the Ukrainian ports of Odessa and Chernomorsk between July 2 and 13.

That was the average number that left daily last October.

The last ship traveling under the agreement is currently loading its cargo at the port of Odessa ahead of the Monday deadline.