Russia axes landmark Ukraine grain deal just hours before deadline

Russia on Monday said it had suspended a humanitarian corridor to deliver key Ukrainian grains to global markets, hours before the agreement’s expiry.

First signed in July 2022, the U.N.-brokered Black Sea Grain Initiative has been repeatedly extended in short increments, amid increasing discontent from Russia over perceived restrictions that limit the full dispatch of its own grain and fertilizer exports.

Moscow formally notified Ankara, Kyiv and the U.N. secretariat that it opposed extending the initiative, Tass cited Russian Foreign Ministry spokeswoman Maria Zakharova as saying on a Google-translated Telegram post.

“Only if concrete results are received, not promises and assurances, will Russia be ready to consider resuming the ‘deal,'” the Russian Ministry of Foreign Affairs said in a Monday statement on Facebook, according to a Google translation. It stressed that the agreement expires on July 18 and was only “directed to serve the narrow self-interests” of Kyiv and its Western allies.

Peskov said that Moscow’s objection to prolonging the grain deal was communicated even before an explosion on a Crimean bridge that reportedly killed two and halted traffic — which Russian-backed officials have called a “terrorist attack” and blamed on Ukraine.

‘Another act of cruelty’

The Black Sea Grain Initiative was set up to abate a global food crisis after Moscow launched a full-scale invasion of fellow key grain exporter and neighbor Ukraine.

Under the deal, more than 1,000 ships carrying nearly 33 million metric tons of agricultural products have departed from Ukraine’s war-weary Black Sea ports of Odesa, Chornomorsk and Pivdennyi, previously known as Yuzhny.

The agreement also oversaw the transport of 725,167 tons of wheat to sail on World Food Program ships to some of the world’s most food insecure countries, such as Afghanistan, Ethiopia, Somalia, Sudan and Yemen.

U.S. Ambassador to the United Nations Linda Thomas-Greenfield slammed Russia for exiting the landmark agricultural agreement.

“Russia has dealt another blow to the world’s most vulnerable,” Thomas-Greenfield said in brief remarks ahead of a meeting of the U.N. Security Council. “This is really another act of cruelty,” she added.

“This is what it looks like when one country decides to hold humanity hostage. The bottom line is this: The world needs the Black Sea Grain Initiative. And all Member States must come together and urge Russia to reverse its decision; resume negotiations; extend, expand and fully implement this initiative.”

The European Union also condemned the Kremlin’s withdrawal from the agreement.

“I strongly condemn Russia’s cynical move to terminate the Black Sea Grain Initiative, despite UN & Türkiye’s efforts,” European Commission President Ursula von der Leyen said on Twitter on Monday. “EU is working to ensure food security for the world’s vulnerable.”

Ukrainian President Volodymr Zelenskyy said Kyiv was ready to work with Turkey and the United Nations to continue the deal, according to press secretary Serhiy Nykyforov.

“We are not afraid. We were reached by companies that own ships. They said that they are ready, if Ukraine will let go, and Turkey will pass, then everyone is ready to continue supply of grain,” Nykyforov added.

Wheat’s at stake

A worker handles wheat grain in a storage granary in Hungary, May 16, 2023.

Akos Stiller | Bloomberg | Getty Images

Wheat prices jumped 3.5% as the news broke.

“Ukraine will now be forced to export most of its grains and oilseeds through its land borders and Danube ports. This will significantly drive up transportation costs and pile further pressure on Ukrainian farmers’ profits. The knock-on effect of this is it could prompt them to plant less next season, placing further pressure on supplies going forward,” said Carlos Mera, head of the agri commodities markets at Rabobank, in emailed comments.

Simon Evenett, a professor of international trade and economic development at the University of St. Gallen, said that Russia’s announcement is the “coup de grace on a deal that was on its last legs.”

“Shipments have been falling steadily this year,” he added.

The grain pact allowed the export of commercial food and fertilizer supplies, including ammonia, from the three Ukrainian ports on the Black Sea.

Cargo ships proceed through the agreed humanitarian corridor to Istanbul, one of the busiest ports of Turkey, whose administration under President Recep Tayyip Erdogan has been deeply immersed in the negotiations.

Following the announcement, Erdogan on Monday expressed his belief that his Kremlin counterpart Putin wants to continue the Black Sea Grain Initiative, hailing the agreement as a diplomatic success, according to a Google translation of comments reported by Turkish state news agency Anadolu on Telegram. Erdogan added that he will hold phone talks with Putin on the topic ahead of their anticipated in-person meeting in August and that the Turkish and Russian foreign ministers will likewise discuss the agreement.

Erdogan’s entreaties may enjoy a frosty reception, after Turkey last week dealt an indirect blow to Moscow by finally endorsing the NATO membership bid of Sweden during a meeting of the military alliance in Vilnius, Lithuania.

“Russia would have you believe it is being forced to end a deal that, in fact, it benefits from – a deal designed to alleviate some of the global consequences of its war of choice,” Michael Carpenter, U.S. ambassador to the Organization for Security and Cooperation in Europe, said on July 13, estimating that over 32 million tons of grain and food reached global markets to date as a result of the deal.

The Russian Rusgrain union said on Telegram that it plans to continue supplying its customers as part of its commitment to fight world hunger, irrespective of the Ukraine deal development.

“All contractual obligations of Russian grain exporters will be fulfilled,” it said, according to a Google translation.