Despite the Russian war of aggression, Ukraine has been able to export 33 million tons of grain since August 2022. This was made possible by an agreement between Russia and Ukraine mediated by the United Nations and Turkey. Before the war, Ukraine was one of the top grain exporters and its supplies are important to prevent famine and price increases around the world. Now Russia is again threatening to phase out the Black Sea Grains Initiative. The agreement ends this Monday at midnight local time (11:00 p.m. CEST).
What does the agreement regulate so far?
The agreement of July 22, 2022 is intended to ensure the safe passage of ships loaded with grain from three Black Sea ports in Ukraine through the Bosphorus despite the war. The ships will sail along a corridor 310 nautical miles long and three nautical miles wide. Agricultural exports had previously been blocked for months because of the war. A coordination center in Istanbul is staffed by representatives of the war opponents as well as Turkey and the UN. Inspections are designed to ensure ships are not carrying weapons.
The first ship sailed at the beginning of August 2022. On Sunday, one of the last ships, the freighter “TQ Samsun”, may have set off from the port of Odessa. According to the UN, it is loaded with more than 15,000 tons of rapeseed.
Why is the agreement so important for Ukraine?
Russia and Ukraine are both major grain exporters, earning billions from exports. For the Ukraine, further impoverished by the war, important income for the state budget would be lost without exports, some of which also go by rail. But for the farmers in the country, which is considered the breadbasket of Europe, it is also about their livelihood. Ukraine also wants to continue playing its role as a guarantor of global food security.
What is the impact of the destruction of the Kachowka Dam on grain production?
The situation in agriculture is already difficult. The Ukraine has not only lost huge agricultural areas for cultivation due to the Russian occupation. There are also minefields in many places. In July, the Kachowka reservoir ran out due to the destruction of the dam of the same name. Large areas of soil, which are among the most fertile in Europe, were flooded and also inundated with sludge from the reservoir contaminated with industrial waste. For the time being, the soil cannot be used for agriculture.
What does the grain initiative mean for poorer countries?
The German Ambassador to the UN Human Rights Council, Katharina Stasch, calls the grain export “a matter of life and death”. Because many countries in Africa are dependent on deliveries from Ukraine. According to the United Nations, 60 million people in seven countries in the Horn of Africa do not always know where their next meal should come from after years of drought. “If the grain initiative is not renewed, East Africa would be hit absolutely hard,” said Dominique Ferretti of the World Food Program’s (WFP) Emergency Relief Office in late June.
Do the poorest countries really benefit?
Although China was the main recipient of the exports made possible by the initiative, the poorest countries have also benefited, calculated the UN Conference on Trade and Development (UNCTAD). The share of the poorest countries in Ukrainian wheat deliveries was higher than before the war, Unctad economist Carlos Razo told the German Press Agency. This year it was 24 percent of Ukraine’s total wheat export, while in the same period of 2021 it was around 22 percent and 17 percent the year before.
According to him, since the grain initiative began, 1.9 million tons of wheat and 26,000 tons of sunflower oil have been delivered to the poorest countries. However, instead of 15 countries as before the war, only nine countries were supplied. For example, no more exports went to Mauritania, Mozambique and Myanmar. “No wheat needed to fight hunger in the poorest countries has gone to China,” Razo said.
What are the implications for the rest of the world?
If the initiative is not extended, grain prices will rise again, fears the chief economist at the UN agricultural organization FAO, Máximo Torero Cullen. The export of millions of tons of grain has led to a drop in global food prices – which are now 23 percent below the record levels of March 2022, according to the UN in early July.
Why is Russia blocking an extension of the agreement?
Russia has insisted from the start that in exchange for its cooperation, Western sanctions, which Moscow sees as hampering its own grain and fertilizer exports, would be eased. The main concern is the Russian State Agricultural Bank, which has been sanctioned and can no longer conduct business. Moscow sees the UN as having a duty to put pressure on the West – and has repeatedly threatened to withdraw from the agreement.
Why does a solution fail?
The EU recently proposed the establishment of a subsidiary of the agricultural bank to handle financial transactions. The spokeswoman for the Russian Foreign Ministry, Maria Zakharova, criticized the plan as a “deliberately unworkable plan”. The establishment of such a bank and its connection to the international bank communication network Swift takes months. However, the lifting of sanctions against the Agricultural Bank, as demanded by Russia, would require the approval of the EU states, which is also considered unenforceable.
Russian banks are finding it difficult to conduct financial transactions because of the disconnection from the banks’ Swift communication network. Insuring ships and freight is also considered difficult. “Under these conditions, it is obvious that there is no basis for continuing the Black Sea Initiative, which expires on July 17,” Zakharova said.
President Vladimir Putin said on state television on Thursday that the next steps are still being considered. There is, for example, the possibility of suspending Russia’s participation in the agreement until the promises made to Moscow as part of the agreement are actually fulfilled.
What’s next after July 17th?
Ukraine has repeatedly complained about problems in implementing the agreement, for example when ships have been stranded in ports for a long time due to a lack of clearance from the Russian side. This situation is likely to worsen again – up to a complete new blockade. Grain transport by sea would again come to a standstill – above all because the safety of the cargo ships would no longer be guaranteed due to the hostilities in the Black Sea, as before the agreement. The laying of new sea mines is also likely to exacerbate the security situation.
