Russia’s Demands and Uncertainty Surrounding Black Sea Grain Agreement: The Impact on Global Food Supply

2023-07-15 20:25:55
Vladimir Putin (Sputnik/Gavriil Grigorov/Kremlin via REUTERS)

Moscow has stepped up its rhetoric, saying it will not extend the deal, which expires on Monday, unless its demands are met, including ensuring its own agricultural shipments do not face obstacles.

Russian President Vladimir Putin expressed in a telephone conversation with his South African counterpart, Cyril Ramaphosa, that he does not perceive that the conditions are met to extend the Black Sea grain agreement, which will expire in about 48 hours.

Moscow demands the end of restrictions on Russian exports of food and fertilizers, but this condition has not been met, the Kremlin has made known during a statement about the call published this Saturday and collected by the Russian agency TASS.

The current terms of the grain deal expire on Monday but the pact could also be provisionally suspended until Russia sees its terms met.

In contrast, the President of Turkey, Recep Tayyip Erdogan, had announced last Friday that Putin had agreed to extend the international agreement on the export of grain from Ukrainian ports a few days after it expired next Monday.

Shortly after, the Kremlin spokesman, Dimitri Peskov, has assured that for the moment Moscow has not yet ruled on the extension of the pact. “We have not made any statement in this regard,” he said, according to TASS.

The President of Turkey, Recep Tayyip Erdogan, had announced this Friday that Putin had agreed to extend the international agreement on the export of grain from Ukrainian ports (Sputnik/Vyacheslav Prokofyev/Pool via REUTERS)

Russia and Ukraine reached in July last year – with the mediation of Turkey and the UN – this agreement for the export of Ukrainian cereals and Russian agricultural products through the ports of the Black Sea and through the Bosphorus Strait.

The agreement, an indirect pact between the two countries, is considered one of the greatest diplomatic triumphs since the start of the conflict and key in the delivery of humanitarian aid to countries in need in Africa and Southeast Asia.

During the call initiated by Ramaphosa, Putin also assured that the main objective of the agreement, to supply African nations in need, had also not been met.

The punitive measures targeting the state-owned Russian Agricultural Bank mean that Russia cannot export its own grain and fertilizer to the desired extent.

The Istanbul Joint Coordination Center that oversees the terms of the agreement has made it known on Saturday, in this regard, that the export of Russian ammonia fertilizers as part of the agreement has not yet occurred.

“The initiative also contemplates the export of fertilizers, including ammonia. There were no such exports under the initiative. The export of ammonia fertilizers under the deal depends on the resumption of operation of the pipeline from the Russian city of Tolyatti to the Ukrainian port of Yuzhne. The pipeline was damaged on June 5, its current status is unknown,” according to the statement.

The Black Sea Grains Initiative has allowed 32.8 million metric tons (36.2 million tons) of food to be exported from Ukraine since last August, more than half to developing countries, including those receiving assistance from the Program Food World.

Máximo Torero, chief economist at the Food and Agriculture Organization of the United Nations, affirms that if the agreement is not renewed, “there will certainly be a new spike” in food prices. “How long that rally lasts will depend a lot on how markets respond.”

The International Rescue Committee calls the grain deal a “lifeline for the 79 countries and 349 million people on the front lines of food insecurity.”

East Africa, for example, has suffered from severe droughts and floods that have destroyed the crops of 2.2 million people who depend on agriculture for their livelihoods, according to Shashwat Saraf, the group’s regional emergencies director for East Africa.

“It is critical that the agreement be extended into the longer term to create some predictability and stability,” he said in a statement.

Countries reliant on importing food from Lebanon to Egypt would have to look for suppliers outside the Black Sea region, raising costs further away, analysts say.

That would compound the costs for countries that have also seen their currencies weaken and debt levels rise because they pay for food shipments in dollars.

For low-income countries and people, food “will become less affordable” if the grain deal is not renewed, World Food Program chief economist Arif Husain told reporters.

(With information from Europa Press)

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