Russia Halts Participation in Ukraine Grain Deal

Russia on Monday announced it would withdraw from a wartime pact to allow grain exports from Ukraine through the Black Sea until demands for sanctions relief on its agricultural exports were met, helping to stabilize global food prices and ease parts shortages. announced that it would overturn the agreement. of Africa and the Middle East.

This agreement, known as the black sea grains initiativewas struck a year ago by United Nations and Turkish mediation to ease the global food crisis after Russia’s all-out invasion of Ukraine. Russia has blocked Ukrainian ports, disrupted grain shipments, and pushed global prices to record highs. His contract has been extended three times, most recently in May. The latest extension expired on Monday.

UN Secretary-General António Guterres said he was “deeply disappointed” by the Russian government’s decision, saying millions facing hunger and consumers facing cost-of-living crises “pay the price”. will be,” he said. He also said he sent Russian President Vladimir V. Putin last week a proposal to further Moscow’s demands. A UN spokesman said Mr Putin did not respond directly.

Russia has repeatedly complained that the deal was one-sided in favor of Ukraine. The Russian government says Western sanctions imposed because of Russia’s devastating war restrict the sale of Russian agricultural products, and Moscow seeks guarantees to free their exports.

In April, Russia’s Foreign Ministry also listed other demands for the renewal of the grain agreement. To reconnect the state-owned Russian Agricultural Bank to the international SWIFT messaging service essential for cross-border payments. Lift restrictions on the supply of spare parts used in marine insurance and agricultural machinery. End sanctions against fertilizer companies and those associated with them. And restore the ammonia pipeline across Ukraine.

Kremlin spokesman Dmitri S. Peskov, who announced on Monday that the Black Sea Grains Agreement had been “suspended,” said that “as soon as the Russian part is implemented, the Russian side will immediately return to fulfilling the agreement.” .

Russia’s announcement comes hours after the deadly attack on the Kerch Strait Bridge, which connects occupied Crimea with mainland Russia. Peskov said the decision to suspend the grain trade was unrelated to the attacks.

Ukraine is one of the world’s leading exporters of wheat, corn, sunflower seeds and vegetable oil. According to UN data, 32.9 million tonnes of grain and other foodstuffs were exported under the initiative. Under the agreement, Russian naval vessels, which have prevented other ships from using Ukrainian ports since the start of the Russian War, will be allowed through. The vessel will be inspected off Istanbul to see if it is carrying weapons.

The impact of the suspended grain pact was immediate. It has disrupted wheat markets, volatile prices and exposed vulnerable countries in Africa and the global South to new food insecurity prospects.

Chicago wheat futures, a barometer of world prices, rose more than 4% at one point as the Kremlin move jeopardized a key trade route for Ukrainian grains to global markets. After that, the price fell more than 1% on the day.

Secretary of State Anthony J. Brinken told reporters at the State Department on Monday: They will realize that Russia has a responsibility not to feed desperately needy people around the world. ”

National Security Council spokesman John Kirby called Russia’s move an “act of aggression” and said the United States was already seeing rising global wheat, corn and soybean prices.

“We urge the Russian government to withdraw its decision immediately,” he added.

Timothy Ashe, a senior strategist at BlueBay Asset Management in London and an expert on Russia and Russia, said Russia’s decision had an unassailable aura of authority following the failed insurrection by the Wagner mercenary group. It appears to be part of Putin’s broader effort to reassert Ukraine.

“It will hurt certain countries that rely on these exports,” Ashe said. But more than that, “this shows how weak Putin is after the Wagnerian coup. He’s now desperate to get whatever bit of influence he can.”

Ukrainian President Volodymyr Zelensky said Russia had broken an agreement with the United Nations and Turkish President Recep Tayyip Erdogan, not with Russia, given that Ukraine had signed separate agreements with two mediators over grain. Stated. In a statement quoted by a spokesman, Mr Zelensky added that Ukraine was ready to resume shipments if the United Nations and Turkey agreed.

With Black Sea ports closed again, Ukraine may have to double down on alternative routes and export grain by truck, train and river barge, but that move will take longer than sea and the same. Can’t handle quantity.

Blinken said the United States would help Ukraine find other means of export, but that “it is very difficult to make up for what is currently lost as a result of Russia’s food weaponization.”

Mr Erdogan said he would talk to Mr Putin about the deal and hinted that it could be revived. “Despite today’s statement, I believe that my friend, the President of the Russian Federation, wants this humanitarian bridge to continue,” Erdogan said in Istanbul.

The deal with Ukraine and Russia, which are also major global suppliers of grain, oil and other affordable food commodities, is particularly important for 14 African countries that depend on them for half of their wheat imports, he said. the paper reports. United Nations Food and Agriculture Organization. Eritrea is totally dependent on them.

When the grain trade began in July 2022, Celestine Tawamba, chief executive of La Pasta, Cameroon’s largest producer of flour and pasta, said, “The ropes are getting tighter, so the deal is going to take off.” We should be able to breathe,” he said.

The original deal allowed Ukraine to resume exports of millions of tons of grain after months of stagnation. Food prices have fallen more than 23 percent from their peak in March 2022, according to the Food and Agriculture Organization’s Food Price Index. The agreement has made it possible for vital food products to be exported from Ukrainian ports to 45 countries on three continents. united nations Said.

But Russia has repeatedly hinted that it may withdraw from the deal before the negotiation extension expires. After accusing Ukraine of attacking a warship in the Black Sea port of Sevastopol with a swarm of drones last year, Russia withdrew and stopped participating in inspections that were part of the deal. Then after a few days it was back.

The collapse of the grain deal dominated Monday’s UN Security Council meeting on Ukraine. Russia’s ally China did not go so far as to directly accuse Russia of withdrawing from the pact, but called on both sides to resume negotiations to restore the pact.

Mr Guterres earlier said he had sent Mr Putin a proposal to “remove hurdles” affecting financial transactions in Russia to meet Russia’s demands. He said the UN will allow a subsidiary of the Agricultural Bank of Russia (one of several institutions barred from SWIFT access by Western sanctions because of Russia’s aggression) to regain access with the European Commission. The agency said it was building a bespoke payment mechanism outsourced. We offer SWIFT for banks through JP Morgan.

UN spokesman Stéphane Dujarric said Russia’s response to the letter became clear in the form of an announcement on Monday. But Mr Guterres said the United Nations would start negotiations with Mr Putin on a new crop proposal.

Despite Russia’s move, analysts say there may be several factors preventing food prices from soaring to the alarming levels seen shortly after Russia invaded Ukraine. .

First, the outlook for global commodity prices is worse than it was a year ago as China’s economic recovery has stalled. Strategist Ash said the global cost of living crisis is weakening demand more generally. An analysis by Oxford Economics, a research firm, said supply chains were also less stressed, lowering manufacturing and production costs.

Aaran Suderman, chief commodities economist at financial services firm StoneX, said “there is no shortage of wheat right now” because Russia is still dumping cheap wheat onto global markets.

“This particular development today may not be effective enough to threaten world hunger,” he said. It means that we are doing it.”

Report contributors: Michael D. Shear, Michael Crowley, Gabriela Sa Pessoa, Daniel Victor, Safak Timur, Cora Engelbrecht, Patricia Cohen, Abdi Latif Dahir and Eliane Peltier.

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