Black Sea grain deal – another blow to the global economy?

WITH just a few days remaining, the United Nations is in a rush to extend an agreement that allows Ukrainian grain to be shipped through the Black Sea to regions grappling with hunger. The initiative aims to alleviate the global food crisis, which has been worsened by the Ukraine war.

If Russia does not agree to the extension of the Black Sea grain initiative (BSGI), which is set to expire on July 17, a surge in global food inflation is imminent. Consequently, every country should prepare for this setback by prioritising their food security.

The BSGI, brokered by the UN and Turkey, also includes a separate agreement to facilitate the delivery of Russian food and fertiliser. However, Moscow insists that this aspect of the initiative has not received the same level of attention as the Ukrainian grain.

On July 4, the Russian Foreign Ministry released a statement expressing its scepticism regarding the extension of the Ukrainian grain initiative beyond the deadline.

According to the ministry, the agreement has failed to meet its initial goals of directing grain towards impoverished nations facing food insecurity. Instead, it has become a purely commercial scheme that primarily ships produce to affluent countries, while Russian food and fertiliser exports remain blocked.

The ministry stated that 81% of the produce shipped under the initiative in the past year ended up in countries with high and upper-middle-income levels, whereas the world’s poorest countries, including Ethiopia, Yemen, Afghanistan, Sudan, and Somalia, received only 2.6%.

Furthermore, the situation concerning blocked Russian food and fertiliser exports continues to worsen, said the ministry. The five primary goals outlined in the Russia-UN memorandum, including the reinstatement of Russia’s major agricultural lender on the SWIFT payments system and the resolution of insurance and logistics issues, remain unfulfilled.

Russian Foreign Minister Sergey Lavrov emphasised Moscow’s position, stating that there are no valid reasons to extend the grain initiative, as promises made to Russia have not been honoured.

The BSGI was initially signed on July 22 for a 120-day period, expiring on November 19, with the possibility of extension in the absence of objections. However, three weeks before its expiration, Moscow withdrew from the deal, citing concerns about the safety of civilian ships due to a drone attack on its fleet in the Black Sea.

Four days later, following a phone call between Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan, and consultations between their defence ministers, Russia resumed its participation in the initiative, ending the four-day period of non-cooperation.

Russia’s defence ministry announced that, with the assistance of the UN and Turkey, it had obtained sufficient written guarantees from Ukraine that the secure shipping corridor and designated Ukrainian ports would not be used to launch attacks against Russia. Putin acknowledged these commitments and stated that if Russia were to withdraw again due to Ukrainian breaches, it would provide the entire volume of grain intended for the poorest countries free of charge from its own stocks.

The BSGI was subsequently renewed for another 120 days on November 19, and on March 18, the UN and Erdogan announced a further extension, without specifying the duration.

Although Ukrainian Deputy Prime Minister Oleksandr Kubrakov stated that the initiative would remain in effect for a longer four-month period, Russian Foreign Ministry spokesman Maria Zakharova informed Russian news agency Tass that Moscow had agreed to a 60-day extension.

In this second extension, Russia’s demand regarding its own agricultural exports influenced the renewal, lasting until May 18.

During this period, Russia’s UN Ambassador Vassily Nebenzia argued that the UN lacks the means to exempt Russian agricultural export operations from Western sanctions. Consequently, Russia only agreed to a 60-day extension until May 18, asserting that if Brussels, Washington, and London genuinely desire to continue food exports from Ukraine through the maritime humanitarian corridor, they should exempt the entire chain of operations associated with the Russian agricultural sector from their sanctions.

As the May 18 deadline approached, the world anxiously awaited Russia’s decision to extend the initiative.

Once again, Erdogan convinced Putin to agree to the renewal. Erdogan stated on May 17 that the BSGI had been extended for two more months, until July 17.

Now, we find ourselves in a similar situation to May, where Russia has already stated that it sees no reason to extend the Ukrainian grain initiative beyond the 17th July deadline.

Convincing Putin to agree to a renewal this time may prove challenging for Erdogan. From the Russian perspective, Erdogan’s diplomatic skills seem compromised due to his decision to release five previously imprisoned Azov battalion commanders to Ukrainian President Volodymyr Zelensky during his recent visit to Turkey.

Kremlin spokesman Dmitry Peskov said Turkey was expected to keep the prisoners in the country until the end of the conflict, as agreed upon by Russia, Ukraine, and Turkey.

Furthermore, Russian Senator Viktor Bondarev, a member of the Federation Council and chair of the defence and security committee, stated that Turkey’s recent statements and actions indicate its shift towards a group of nations that Moscow considers unfriendly.

In an interview with TASS news agency on 10th July, Bondarev suggested that Erdogan is succumbing to pressure from the West. He cited Ankara’s support for Ukraine’s bid to join Nato and the subsequent release of the Azov regiment commanders as actions that undermine Turkish neutrality.

While acknowledging the importance of national security and interest, Bondarev criticised Erdogan for betraying Russia and making a series of impulsive decisions. He also speculated that the release of the Azov commanders to Zelensky may have been a reaction to the deterioration of the BSGI. – July 15, 2023.

* Jamari Mohtar reads The Malaysian Insight.

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