Black Sea grain deal ends after Russia quits By Reuters

© Reuters. FILE PHOTO: The Turkish-flagged bulk carrier Tq Samsun leaves the sea port of Odesa, amid Russia’s attack on Ukraine, in Ukraine July 16, 2023. REUTERS/Serhii Smolientsev

By Michelle Nichols and Guy Faulconbridge

UNITED NATIONS/MOSCOW (Reuters) – A deal that had allowed Ukraine’s safe export of grain to the Black Sea for the past year expired on Monday after Russia quit and warned it could not guarantee the safety of ships in a move the United Nations said would “strike a blow to people.” in need everywhere.”

Moscow suggested that if requests to increase its own grain and fertilizer exports were met, Moscow would consider reviving the Black Sea agreement. However, UN Secretary-General Antonio Guterres said that a UN pact that had helped Russia make deliveries over the past year was also being terminated.

“Only after receiving real results, and not promises and guarantees, will Russia be ready to consider restoring the deal,” the Russian foreign ministry said.

Russia told the United Nations shipping agency – the International Maritime Organization (IMO) – that “guarantees for the safety of navigation” had been revoked and that “necessary proactive measures and countermeasures to neutralize the threat posed by the Kiev regime in the area will be taken.”

Insurers on Monday were reviewing whether to freeze coverage for any ships wishing to sail to Ukraine. Reaction in grain markets was modest, with US wheat futures up about 3% while US corn futures rose nearly 1%.

“I think there is market confidence that Russia and the EU have a large supply of wheat that can meet world demand in the coming months, with the harvest arriving,” said a German trader.

The Black Sea deal was brokered by the United Nations and Turkey in July last year to fight a global food crisis exacerbated by Russia’s invasion of Ukraine in February 2022. Ukraine and Russia are among the world’s top grain exporters.

Ukrainian President Volodymyr Zelenskiy said on Monday everything must be done so that the Black Sea grain export corridor continues to be used, his spokesman said.

“Today’s decision by the Russian Federation will hit people in need everywhere,” UN Secretary General Guterres told reporters.

The United Nations will continue to strive to ensure unhindered access to global markets for food and fertilizer products from Ukraine and Russia, said Guterres.

The US ambassador to the UN, Linda Thomas-Greenfield, described Moscow’s move as an “act of cruelty”.

THE LAST SHIP HAS SAILED

Nearly 33 million metric tonnes of corn, wheat and other grains have been exported by Ukraine under the arrangement. The last ship left Ukraine under the deal on Sunday.

To convince Russia to agree to the Black Sea deal, a three-year memorandum of understanding was drawn up in July 2022 in which UN officials agreed to help Russia secure exports of its food and fertilizer to foreign markets.

Russia’s main demands are the resumption of piped ammonia exports to the Ukrainian port of Odesa and the reconnection of the state agricultural bank Rosselkhozbank to the SWIFT international payment system. It was cut by the European Union in June last year following the invasion.

Guterres said on Monday that the UN had succeeded in creating a “bespoke payment mechanism” for the Agricultural Bank of Russia through US bank JPMorgan Chase & Co (NYSE:) and “recently brokered a concrete proposal” with the European Commission to allow a subsidiary Rosselkhozbank to regain access to SWIFT.

But he signaled that all those efforts were doomed as Russia’s withdrawal from the Black Sea deal also ended a pact with the United Nations on its own exports, in which Moscow had committed to “facilitate the unhindered export of food, sunflower oil and fertilizer from Ukraine.” Black Sea Harbor.”

GLOBAL HUNGER

Guterres has made a last-ditch effort to save the Black Sea grain deal by writing to Russian President Vladimir Putin last Tuesday asking him to extend it in return for the European Commission’s cooperation on Rosselkhozbank.

In a letter to Guterres on Monday, Russia said the options presented were “not feasible and will not ensure uninterrupted cross-border financial transactions,” Russia’s deputy envoy to the UN Dmitry Polyanskiy posted on Twitter. He said the letter notified Guterres that Moscow was dropping the Black Sea grain deal.

EU Commission President Ursula von der Leyen called Russia’s decision a “cynical step”, adding that the EU will continue to work to ensure food security for poor countries.

Turkish President Tayyip Erdogan said he believed Putin wanted a continuation of the deal, adding that he would discuss it when they met in person in August.

Russia has agreed three times in the past year to extend the Black Sea deal, but also briefly suspended its participation in late October in response to drone attacks on its fleet in Crimea.

There are concerns about the impact that ending the pact will have on feeding the world’s hungry.

Under the deal, the UN says the World Food Program (WFP) has sourced 80% of its wheat so far in 2023 from Ukraine – up from 50% in 2021 and 2022. WFP has shipped some 725,000 metric tonnes of Ukrainian wheat to Afghanistan, Sudan, Djibouti, Ethiopia, Kenya, Somalia and Yemen to fight hunger.

“Rations are being reduced for children every day now around the world – it is truly dramatic and this (deal) is one of the few glimmers of hope in these biblical times of famine,” said Jan Egeland, Secretary General of the Norwegian Refugee Council.