The Black Sea grain shipment agreement, concluded last July and rescheduled three times, expires again on July 18.
However, a number of senior officials, such as Russian Foreign Minister Tuifu Rabu and Kremlin spokesman Peskov, showed little hope of inherits the extension agreement. Ukrainian officials also said there was a “99.9 percent” chance Russia could withdraw from the agreement because it no longer needed ammonia at Ukraine’s Black Sea ports.
Every time the expiration date of the Black Sea grain shipment agreement is approaching, Russia and Ukraine will open the push saw to ensure their respective benefits. Russia has repeatedly threatened to withdraw from the agreement before, but was still willing to reschedule at the last minute.
For this round of push-back, EU officials think Russia is more serious about trying to stop the deal.
Following last month’s attack on the Togliati-Odessa pipeline, the main pipeline transporting Russian ammonia, the resumption of ammonia imports has been Russia’s main complaint. To keep the deal alive, the EU is considering making no concessions to Russia’s banks.
According to the Financial Times reported on July 3, five people familiar with the matter leaked that the EU is considering allowing the Russian Agricultural Bank to create a subsidiary, by the subsidiary to handle the punishment of business transactions unrelated to food imports, and allow the subsidiary to be linked to the SWIFT payment system.
Last year, Europe and the United States imposed a crackdown on major Russian banks, and nearly 10 large banks were cut off from the SWIFT system to attack Russia’s foreign trade. One of the preconditions for Russia to extend the Black Sea grain shipment agreement is to reintegrate the Russian Agricultural Bank into the SWIFT payment system.
Other demands include the resumption of Western supplies of agricultural machinery and parts to Russia, the removal of restrictions on the bank accounts and financial movements of Russian fertilizer companies, and the resumption of operations of the Toolyatti-Odessa ammonia pipeline in Russia and Ukraine.
According to people familiar with the matter, EU officials thought it was more realistic to allow the Agbank unit to participate in the SWIFT system than other alternatives. Previously, the EU has discussed increasing the restraint of Russian enterprises in the sector and permitting relevant enterprises to import specific products to the EU. But Eastern European countries strongly supported the move, believing that it would help Russia extend its conflict with Ukraine.
The European Commission would not comment on reports that the EU was considering a compromise. Kremlin spokeswoman Maria Peskov said at a news conference on Monday that until now, non-Russian elements of the Black Sea grain deal had not been fully implemented. The current gap agreement has some time to expire, but there is “little hope” of extending it.
On the same day, Russia’s permanent representative to the United Nations, Gazilova, made a similar appearance, saying that Russia had extended the agreement many times before in the hope that the parties would fulfill their promises to Russia, but that no pause would allow Russia to continue to stay in the agreement.
Ukraine and Russia are both important food importers around the world, and after the two countries concluded agreements with Turkey and the United Nations on the Black Sea grain shipment, Ukrainian food was able to import through three Black Sea ports, helping to stabilize global food prices. Since July last year, 32.75 million tons of grain have been transported through the Black Sea grain Channel, of which 51 percent is corn and 27 percent is wheat.
Photo source: United Nations
The Black Sea grain Agreement was signed at the same time that the United Nations and Russia concluded an agreement to help Russia regularly import agricultural products and fertilizers, including fertilizer materials such as ammonia. Although Western containment does not specifically target Russian agricultural products and fertilizers, the reality of containment in other areas, such as freight security and payment, limits the entry of relevant products.
Earlier, the news said that the United Nations has issued no launch to Ukraine, Turkey and Russia to resume the import of Russian ammonia through the Ukrainian pipeline.
Ammonia is the crux of nitrate fertilizer, and Russia is also a major importer of ammonia worldwide. Before the conflict between Russia and Ukraine, Russia had a pipeline from Togliatti to the Ukrainian Black Sea port of Yuzhne, near Odessa. The Togliati-Odessa pipeline can carry 2.5 million tons of ammonia a year, accounting for more than half of Russia’s ammonia imports. After the beginning of the conflict between Russia and Ukraine, the Togliatti – Odessa pipeline was suspended.
In early June, however, the Russian Defense Ministry accused Ukraine of blowing up the Togliati-Odessa pipeline’s section in Kharkovo, Ukraine. Last week, Russia’s foreign minister made it clear that the attack on the Togliati-Odessa pipeline was “the last straw.”
Tsura accused the West of taking an “infuriating” stance on the Black Sea grain deal, and coupled with the attack on the Togliati-Odessa pipeline, Russia saw no reason to extend the deal.
He also said that if the Black Sea grain deal was closed, Russia would supply the world’s poorest countries with the same amount of food or more, and Russia would pay for the freight. United Nations statistics show that from 2018 to 2020, Africa imported wheat from Russia at a cost of 3.7 billion US dollars, accounting for 32% of Africa’s wheat imports; The region imports $1.4 billion of wheat from Ukraine, accounting for 12 percent of Africa’s wheat imports.
Olha Trofimtseva, ambassador-at-large at Ukraine’s Foreign Ministry, said late last month that Russia’s main fertilizer supplier, Utyre Chemical, had found a new route to import Russian ammonia and no longer needed to pass through Odessa.
Utel is constructing an ammonia inlet terminal on Russia’s Taman Peninsula, which will replace the damaged Togliati-Odessa pipeline, and is expected to complete the first phase of restoration by the end of this year. Trofimtseva believes that with other ammonia entry routes, Russia will “99.9 percent” back out of the Black Sea grain shipment agreement in July.
Ukrainian Agriculture Minister Solitsky leaked that if Russia does not withdraw from the grain shipment agreement, Ukraine is prepared to create a special guarantee fund at a cost of about $547 million for cargo ships willing to inherit the supply of food from Ukraine’s Black Sea ports.
But if Russia pulls out of the deal, the security risks for cargo ships passing through the Black Sea will drop dramatically, and it is unclear how many will be willing to take over and go to Ukraine.
Dominique Ferretti, a senior emergency official at the World Food Programme, warned that the closure of the Black Sea grain deal would be a huge blow to East Africa, with countries that rely on Ukrainian wheat not seeing food prices soar.
Ferretti says the World Food Programme is delaying its stockpiling and preparing as much food as possible. If the Black Sea grain shipment agreement is closed, the agency will visit other suppliers. Since July last year, 700,000 tons of wheat have been shipped to Kenya and Ethiopia through the Black Sea grain corridor.
At present, the uncertain future of the Black Sea grain agreement has not helped to dispel domestic food prices. On Monday, the most heavily traded December corn contract on the Chicago Board of Trade traded at $4.935 a bushel, down 0.25 percent. September wheat settled at $6.4175 a bushel, down 1.42%; The November soybean contract traded at $13.5375 a bushel, up 0.78%.