Russia suspends participation in Ukraine grain deal

Russia suspends participation in Ukraine grain deal

Russia said on Monday it was backing out of a wartime accord allowing grain exports from Ukraine through the Black Sea unless it met demands to ease restrictions on its agricultural exports. canceled which has helped stabilize global food prices and reduce portion shortages. of Africa and the Middle East.

This agreement is known as Black Sea Grain Initiative, brokered by the United Nations and Turkey to ease a global food crisis following Russia’s full-scale invasion of Ukraine a year earlier. Russia blockaded Ukrainian ports, preventing ships from carrying its grain, and global prices soared to record highs. The deal has been extended three times, most recently in May. The latest extension expired on Monday.

UN Secretary-General Antonio Guterres said he was “deeply disappointed” by Moscow’s decision and that millions of people facing hunger as well as consumers facing a livelihood crisis would “pay the price.” He also said that he had sent a proposal to Russian President Vladimir V. Putin last week to meet Moscow’s demands. A UN spokesman said Mr Putin never gave a straight answer.

Russia has repeatedly complained about the deal, which it calls one-sided in favor of Ukraine. Moscow has said Western sanctions imposed because of Moscow’s devastating war have restricted sales of Russia’s agricultural products, and Moscow has sought guarantees to free those exports.

In April, Russia’s foreign ministry also listed other demands for renewing the grain deal: reconnecting the state-owned Russian Agricultural Bank to the international SWIFT messaging service that is critical for cross-border payments; remove restrictions on the supply of marine insurance and spare parts used in agricultural machinery; End sanctions against fertilizer companies and those associated with them; and restore the ammonia pipeline crossing Ukraine.

Kremlin spokesman, Dmitry S. Peskov, who announced on Monday that the Black Sea grain agreement was “halted”, said “the Russian side will immediately return to the implementation of that agreement as soon as it is completed.”

Russia’s announcement came hours after the deadly attack on the Kerch Strait bridge linking the Crimean peninsula to mainland Russia. Mr Peskov said the decision to suspend the grain deal was not linked to the attack.

Ukraine is one of the world’s leading exporters of wheat, corn, sunflower seeds and vegetable oil. According to UN data, it has exported 32.9 million tonnes of grains and other food items under this initiative. Under the agreement, the ships are allowed to pass by Russian naval vessels, which have barred other ships from using Ukraine’s ports since the start of the war with Russia. Ships are inspected off the coast of Istanbul to make sure they are not carrying weapons.

The effects of the suspended grain deal soon became apparent. It rattled wheat markets, driving prices up sharply and exposing vulnerable countries in Africa and the Global South to the prospect of a new round of food insecurity.

Chicago wheat futures, a barometer for global prices, briefly jumped more than 4 percent as the Kremlin’s move threatened a key trade route for grain from Ukraine to global markets. Later, prices declined more than 1 percent for the day.

Secretary of State Antony J. Blinken told reporters at the State Department on Monday: “I hope every country is watching this very closely. They will see that Russia is responsible for denying food to those in dire need around the world.

US National Security Council spokesman John Kirby called Russia’s move a “military act of aggression” and said the United States was already seeing global wheat, corn and soybean prices rise.

“We urge the Russian government to immediately reverse its decision,” he added.

Timothy Ash, a senior strategist at Bluebay Asset Management in London and a Russia expert, said Russia’s decision appeared to be part of a broader effort by Mr. Is. Ukraine.

“This will hurt specific countries that depend on these exports,” Mr Aish said. But beyond that, “it shows just how vulnerable Putin is after the Wagner coup: he is now desperate to take advantage of anything.”

Ukraine’s President Volodymyr Zelensky said Moscow instead of his country had broken its deal with the United Nations and Turkish President Recep Tayyip Erdogan, noting that Ukraine had made a separate agreement with the two mediators on the grain. In comments reported by his press office, Mr Zelensky said Ukraine was ready to resume shipments if the UN and Turkey agreed.

With Black Sea ports closed again, Ukraine may have to double down on using alternative routes, exporting grain by truck, train and river boats – journeys that take longer than shipping by sea, and Can’t handle the same amount.

Mr. Blinken said the United States would help Ukraine find other means of export, but “it’s really hard to compensate for what Russia is losing as a result of weaponizing food.”

Mr Erdogan said he would talk to Mr Putin about the accord and hoped it could be revived. “Despite today’s statement, I believe that the President of the Russian Federation, my friend Putin, wants to continue this humanitarian bridge,” Mr Erdogan said in Istanbul.

The deal between Ukraine and Russia – which is also a major global supplier of grain, oil and other affordable food products – is particularly important to 14 African countries that rely on the two countries for half their wheat imports. Food and Agriculture Organization of the United Nations, Eritrea is completely dependent on them.

When the grain deal opened in July 2022, Celestin Twamba, chief executive of La Pasta, Cameroon’s biggest flour and pasta producer, said, “The noose was tightening, so the deal would help us breathe.”

The initial agreement allowed Ukraine to resume exports of millions of tons of grain that had been halted for months. According to the Food and Agriculture Organization’s Food Price Index, food prices have declined by more than 23 percent from their highest level in March 2022. The agreement allows vital food products to be exported from Ukrainian ports to 45 countries on three continents. United Nations Said.

But time and time again, before each negotiation extension ends, Russia has indicated it may withdraw from the deal. Last year, Russia halted participation in the inspection, which was part of the agreement, after accusing Ukraine of attacking its warships in the Black Sea port of Sevastopol with a swarm of drones. Then within a few days it reconnected.

The collapse of the grain deal loomed large over Ukraine on Monday at a session of the UN Security Council. Russia’s ally China did not directly condemn Russia for withdrawing from the deal, but called for the two sides to resume talks to restore the accord.

Mr Guterres had earlier said that to help meet Russia’s demands, he had sent Mr Putin a proposal to “remove barriers” affecting his financial transactions. He said the UN had proposed enabling a subsidiary of the Russian Agricultural Bank – one of several institutions banned from SWIFT by Western sanctions because of Russia’s aggression – to gain access with the European Commission. The agency had created a special payment mechanism outside. SWIFT keyed to the bank through JP Morgan.

UN spokesman Stephane Dujarric said Russia’s response to the letter came in the form of Monday’s announcement. However, Mr Guterres said the UN intended to open talks with Mr Putin on a new grain proposal.

Analysts say that despite Russia’s move, some factors may prevent food prices from rising to the alarming levels seen just after Russia’s invasion of Ukraine.

For one thing, the global commodity price outlook is weaker than a year ago due to the faltering economic recovery in China. Mr Aish, the strategist, said the global cost-of-living crisis was dampening demand in general. Supply chain tensions are also easing, and manufacturing and production costs have gone down, according to an analysis by Oxford Economics, a research institute.

Arlan Suderman, chief commodities economist at financial services firm StoneX, said Russia is still dumping cheap wheat into the global market, “so we’re not running out of wheat right now.”

“This particular development today may not reduce the risk of world hunger,” he said, “but continued growth without a solution means the risks are still rising.”

Reporting contributed Michael D. Shearer, Michael Crowley, gabriella sa pessoa, Daniel Victor, Safak Timur, Cora Engelbrecht, Patricia Cohen, abdi latif dahir And alien peltier,

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