Home
+
Putin complained that Russia has been cheated by the West because its own exports still faced problems
Published : 17 Jun 2023, 04:48 PM
President Vladimir Putin said this month that Russia was considering withdrawing from theBlackSeagraindeal as he accusedthe West of cheating Moscowbecause it still faced obstacles getting its own agricultural goods to world markets.
Putin said he would discuss the future of thegraindeal withvisiting African leaderson Saturday.
THE PACKAGE DEAL
The United Nations and Turkey brokered theBlackSeaGrainInitiativelast July to help tackle a global food crisis worsened by Moscow's invasion of Ukraine and blockade of itsBlackSeaports.
It allows food and fertiliser to be exported from three Ukrainian ports - Chornomorsk, Odesa and Pivdennyi (Yuzhny). The deal has been extended three times, most recently until Jul 17.
Nearly 32 million tonnes of mostly corn and wheat have so far been exported by Ukraine under the deal. The initiative also allows for the safe export of ammonia - a key ingredient in nitrate fertiliser - but none has been shipped.
To convince Russia to agree to the initiative, athree-year pactwas also struck last July in which the United Nations agreed to help Moscow overcome any obstacles to its own food and fertilizer shipments.
While Russian exports of food and fertiliser are not subject to Western sanctions imposed after the February 2022 invasion of Ukraine, Moscow says restrictions on payments, logistics and insurance have amounted to a barrier to shipments.
UN spokesperson Stephane Dujarric said last week that "the past months have shown tangible progress" on improving Russian exports, but added: "Challenges remain but we will spare no effort to overcome all remaining obstacles."
WHY WERE THE DEALS NEEDED?
The poorest in the world were hit worst by the rising global food prices. The UN World Food Programme (WFP) warned in March last year that its ability to feed some 125 million people was under threat because 50% of itsgraincame from Ukraine.
Between 2018–2020, Africa imported $3.7 billion in wheat (32% of total African wheat imports) from Russia and another $1.4 billion from Ukraine (12% of total African wheat imports), according tothe United Nations.
The United Nations said last year that 36 countries count on Russia and Ukraine for more than half of their wheat imports, including some of the poorest and most vulnerable, including Lebanon, Syria, Yemen, Somalia and Democratic Republic of Congo.
Under theBlackSeagraindeal, more than 625,000 tonnes ofgrainhas so far been shipped by the WFP for aid operations in Afghanistan, Ethiopia, Kenya, Somalia and Yemen. In 2022, WFP procured more than half its global wheatgrainfrom Ukraine.
RUSSIAN COMPLAINTS
Putin complained that Russia has beencheatedby the West because its own exports still facedproblems.
The United States has dismissedRussia'sgrievances. US Ambassador to the UN Linda Thomas-Greenfield said last month: "It is exportinggrainand fertiliser at the same levels, if not higher, than before the full scale invasion."
Putin said Russia only agreed to the deal for the sake of countries in Africa and Latin America but that only around 3.2-3.4% of thegraingoes to the world's poorest countries while 40% went to prosperous countries.
According toUN data, around 3% of exports under theBlackSeadeal has gone to low-income countries, while high income countries get around 44% and the rest to middle-income states.
The United Nations has always said the deal was a commercial enterprise and not intended to be entirely humanitarian, but that it benefited poorer countries by helping lower food prices globally.
RUSSIA'SDEMANDS
In a letter to UN officials in March, Russia spelled out the demands it wants met in exchange for its continued cooperation in thegraindeal:
- Moscow wants the Russian Agricultural Bank (Rosselkhozbank) reconnected to the SWIFT payments system. The bank was cut off from SWIFT by the European Union in June last year overRussia'sinvasion. An EU spokesperson has said the bloc is not considering the reinstatement of Russian banks.
As a workaround, UN officials got US bank JPMorgan Chase & Co to startprocessingsome Russiangrainexport payments withreassurancesfrom the US government.
The United Nations is also working with the African Export-Import Bank (Afreximbank) tocreate a platformto help process transactions for Russian exports ofgrainand fertiliser to Africa, the top UN trade official told Reuters last month.
Russia wants the resumption of itsBlackSeaammonia exports via a pipeline fromRussia'sTogliatti to Ukraine's Pivdennyi port. The pipeline, which pumped up to 2.5 million tonnes of ammonia annually, was shut down by the war.
In September,Reuters reportedthat the UN proposed that Russian fertiliser producer Uralchem sell its ammonia to US-headquartered commodities trader Trammo once it reaches the Russia-Ukraine border via the pipeline.
Until the ammonia pipeline is restarted, Moscow has said it will limit the number of vessels allowed to travel to Pivdennyi port under theBlackSeagraindeal. UN data shows no ships have visited Pivdennyi port for more than a month.
Last week Russia accused Ukrainian forces of blowing up part of the pipeline, the world's longest carrying ammonia, in Ukraine's Kharkiv region. The regional Ukrainian governor said Russia had shelled the pipeline. Neither side provided evidence.
More than 400,000 tonnes of Russian fertiliser was also initially stranded in European Union ports after the war started, though UN officials have negotiated its release for export to Africa after Russia said it would be donated.
Russia also wants a resumption of supplies to Russia of agricultural machinery and spare parts; lifting restrictions on insurance and access to ports for Russian ships and cargo; and unblocking accounts and financial activities of Russian fertilizer companies.
RUSSIANGRAIN, FERTILISER EXPORTS
While exports of Russianwheatand some fertilisers have risen since the war, exports of Russian ammonia and potassium-based fertilisers have plummeted.
In the 2021-22season, Russia exported 38.1 million tonnes ofgrain, including 30.7 million tonnes of wheat, while in the 2022-23season, Putin said Russia is expected to export around 55-60 million tonnes ofgrain- likely to be a record.
According to theU.S. Department of Agriculture,Russia'smain wheat export markets are in the Middle East and Africa and exports to all regions have increased in the 2022-23 period.
WhileRussian exportsof urea and potassium-based fertilisers diammonium and monammonium phosphate rose from Russia, exports of potassium-based fertiliser muriate of potash (MOP) fell 37% in 2022, according to trade data.
