Black Sea Grain Export Agreement Hangs in the Balance as Russia’s Decision Looms, Impacting Global Food Crisis

Black Sea Grain Export Pact May Expire Amidst Russia-Ukraine Crisis

UNITED NATIONS – A critical pact allowing Ukraine to safely export grain from the Black Sea could come to an end if Russia does not agree to extend it. The agreement, brokered by the United Nations and Turkey to address the global food crisis exacerbated by Russia’s invasion of Ukraine, is set to expire at the end of Monday. Russia’s blockade of Ukraine’s Black Sea ports following its invasion in February 2022 sent global grain prices soaring, impacting both countries, which are among the world’s top grain exporters.

Under the pact, Ukraine has exported nearly 33 million metric tons of corn, wheat, and other grains over the past year. However, Russia has threatened to quit the agreement, claiming that its demands to improve its own grain and fertilizer exports have not been met. Additionally, Russia has expressed dissatisfaction with the allocation of grain to poor countries. In contrast, the United Nations argues that the agreement has significantly benefited these nations by reducing global food prices by more than 20%.

Foreign Minister Sergei Lavrov stated that Russia has initiated discussions with Turkey to devise a plan to ensure that Russian wheat, potentially processed by Turkey, reaches countries in need, regardless of the Black Sea deal’s fate. The U.N. Security Council will convene on Monday, chaired by British Foreign Secretary James Cleverly, to discuss the Ukraine crisis. Several European foreign ministers are expected to attend the meeting as well.

The United Nations’ World Food Program has procured 80% of its wheat from Ukraine so far this year, a dramatic increase from the 50% it obtained in the past two years. This increase has enabled the program to ship approximately 725,000 metric tons of Ukrainian wheat to countries like Afghanistan, Sudan, Djibouti, Ethiopia, Kenya, Somalia, and Yemen to combat hunger. The agreement has facilitated the supply of grain to 45 countries across Asia, Western Europe, Africa, and Eastern Europe.

Russia has agreed to extend the Black Sea pact three times in the past year but briefly suspended its participation in October 2022 after a drone attack on its fleet in Crimea. To convince Russia to continue with the pact, a three-year deal was reached in July 2022, with U.N. officials pledging to assist Russia in exporting its food and fertilizer to foreign markets. Despite Western sanctions against Russia, its food and fertilizer exports remain unaffected. However, Russia claims that restrictions on payments, logistics, and insurance have impeded its shipments.

A significant Russian demand has been to reconnect the Russian Agricultural Bank, also known as Rosselkhozbank, to the SWIFT international payments system. The European Union severed ties between Rosselkhozbank and SWIFT in June 2022 due to Russia’s invasion of Ukraine. U.N. Secretary-General Antonio Guterres made a final attempt to persuade Russian President Vladimir Putin to extend the Black Sea grain deal. In exchange, the European Union would reconnect a subsidiary of Rosselkhozbank to SWIFT for grain and fertilizer transactions. However, Guterres is awaiting Putin’s response.

As a temporary solution to the SWIFT issue, U.N. officials have already managed to secure JPMorgan Chase & Co to process some Russian grain export payments, with reassurances from the U.S. government. Moreover, the United Nations is collaborating with the African Export-Import Bank to establish a platform that will facilitate the processing of transactions for Russian exports of grain and fertilizer to Africa.

In these critical moments, the Black Sea grain pact hangs in the balance as Russia’s decision on its extension will have far-reaching consequences for global food security.