Russia rejoins grain deal after threatening to pull out

Russia rejoins grain deal after threatening to pull out
Russia has reversed its recent threats and will resume the Black Sea grain deal just days after suspending its involvement. / bne IntelliNews
By Dominic Culverwell in Berlin November 2, 2022

Russia has reversed its recent threats and will resume the Black Sea grain deal just days after suspending its involvement following a strike on its fleet in Crimea.

Russian Defence Minister Sergei Shoigu informed his Turkish counterpart that Moscow had decided to resume the Black Sea Grain Initiative, which allows for the safe export of Ukrainian grain organised by a control centre in Istanbul. The initiative was signed on July 22 with mediation from the UN and Turkey to ease the global food crisis escalated by Russia’s naval blockade.

"After the call we held yesterday with (Russian President Vladimir) Putin, Russian Defence Minister Mr. Shoigu called our National Defence Minister Hulusi Akar and expressed that the grain transports will continue as agreed before as of 12.00 (pm) today," Turkish President Tayyip Erdogan said on November 2, Reuters reported.

Russia had accused Ukraine and its allies of “abusing” the humanitarian corridor to conduct a strike on its Black Sea fleet last week using aerial and naval drones, leading Russia to threaten to withdraw from the grain deal. Moscow said it would suspend the deal until certain guarantees were put in place, causing wheat and corn prices to jump and elevating fears of another food crisis.

“Ukraine must guarantee that there are no threats for civilian ships and Russian vessels,” Putin said at a press briefing in Sochi, Bloomberg reported. “They created a threat both to our ships, which are supposed to ensure the safety of grain exports, and to civilian ships that are engaged in this.”

However, the deal doesn’t prohibit Ukraine from targeting Russian military ships if grain-related ships or infrastructure are not involved and Ukrainian President Volodymyr Zelenskiy said that he had spoken with UN Secretary-General Antonio Guterres and confirmed that Ukraine is committed to the Grain Deal. Meanwhile, Ukrainian Foreign Minister Dmytro Kuleba noted that the Black Sea explosions were "220 km away from the grain corridor."

A tense standoff ensued, but Ukraine continued to export its agricultural products, with the backing of the UN and Turkey, despite the ships no longer being officially protected by the agreement, thus putting them at risk of a Russian attack. However, experts believed that Moscow was unlikely to strike a commercial ship carrying agricultural products with all eyes on the Black Sea.

Although the grain deal was a major breakthrough, it wasn’t without problems, and Kyiv accused Russia of deliberately slowing down inspections last month and causing technical difficulties at the Istanbul command centre where teams from Russia, Ukraine, Turkey and the UN conduct checks. But after Russia announced its suspension, leaving only the UN and Turkey to conduct inspections, Ukraine recorded a significant increase in crop exports, Ukraine Business News reported. A recorded 46 outbound vessels passed through inspection on October 31, compared with 15 at the start of October noted by the European Business Association, adding weight to Ukraine’s accusations.

The deal is due to expire after 120 days on November 19 and the Kremlin has been signalling for weeks that it will not renew the agreement. Moscow claimed there is “a lot to do” before the deal can be renewed, at a conference on October 24, accusing Europe of hogging the majority of grain exports instead of distributing them to the Global South and failing to free Russian food and fertiliser exports from sanctions.

Foreign Minister Sergey Lavrov said there need to be clear legal exemptions from sanctions for Russian companies, particularly the Russian Agricultural Bank. Moreover, he added that Russian ships should have free entry to European ports as well as foreign ships into Russian ports.

Although Russia has decided to continue with the deal for now, November 19 will be the definitive date. If Moscow does decide to pull out, then analysts worry that grain prices will shoot up again and plunge the world into another food crisis, exemplified by Chicago wheat futures prices jumping by nearly 6% and corn futures by nearly 3% after Russia initially suspended the deal.

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