Russia on Monday refused to extend a deal allowing Ukraine to send corn, wheat, barley and other farm products to global markets under UN supervision.
The Black Sea Grain Initiative officially ended on Sunday. Yet, Russia did not announce its suspension of cooperation until Monday, following a Ukrainian military attack on a Russian bridge linking Crimea to the Russian mainland.
Ukrainian attack on the Crimean bridge It was the second major attack on the crossing since the war began last February. It killed two Russian citizens, after which the authorities called it a “terrorist attack”.
Ukraine said the attack was fully legal under the laws of war, as it targeted a vital military supply route.
The Crimean Bridge was built after Russia forcibly annexed Crimea in 2014. The massive structure cost $4 billion and connects Russia to the peninsula by road and rail. It is also a major symbol of Russia’s commitment to keep Crimea.
However, Ukraine says it will not stop fighting until Crimea is over back in his hand.
Russia’s revenge attack on Odessa
Missile attack in what Russia called “massive retaliation” Ukrainian city of Odessa And Mykolayiv early Tuesday. Attacks continued overnight into Wednesday, with additional attacks on warehouses and port facilities in Odessa and Chornomorsk.
Ukrainian officials said the missiles destroyed 60,000 tonnes of grain and damaged vital port infrastructure. Odessa, Chornomorsk, and a third port, Yuzhny, were all source points for Ukrainian grain shipments under the Black Sea deal.
The Black Sea Grain Initiative was signed in July 2022 by Russia and Ukraine, with mediation by Turkey and the United Nations, to reduce global grain shortages that had caused prices to rise.
As of Wednesday morning, US corn and wheat futures were up 7% and 4% compared to the start of the week. Still, both commodities are much cheaper than at the peak of the grain crisis last year.
Experts say prices could rise dramatically if the agreement is not renewed.
Russia said it would reconsider expanding the Black Sea pact if the international community lifted banking sanctions on its agricultural exports. Among other measures, Moscow is seeking restoration of international SWIFT banking privileges for its food and fertilizer exports.
Although international sanctions have cut off SWIFT links with Russia, they allow the export of agricultural products. The United Nations and Western diplomats say Russia can and does sell grain and fertilizer without SWIFT. Russia disagrees and says the international banking system is vital to its exports.
UN Secretary-General Antonio Guterres said on Monday that he sent a letter to Russia last week proposing to renew the SWIFT mechanism for a subsidiary of the Russian Agricultural Bank.
Turkish President Recep Tayyip Erdoğan, who helped promote the Black Sea Grain Initiative last summer, said Monday he planned to speak with Russian President Vladimir Putin soon and that Russia would likely back the accord.
The Black Sea Grain Initiative allowed ships to sail from three Ukrainian ports to a fourth in Turkey, where UN, Russian and Ukrainian inspectors made sure the ships were not carrying rejected goods and passengers. From there, ships carried their grain to global markets.
About 33 million metric tons of grain were transported this way through July 2022, the United Nations said, with half going to developing countries, including countries receiving support from the World Food Program. Russia and Ukraine are the first and fifth largest global grain exporters.
The Black Sea Initiative was necessary because Russian naval forces patrolled the Black Sea, effectively blockading the Ukrainian coast. Although the Ukrainian Navy retains combat capabilities, it is no match for the Russian Navy.
The fighting has badly affected Ukraine’s eastern and southern regions, but grain production continues in vast areas in the country’s interior. Earnings from those exports are vital to the struggling Ukrainian economy.
Although Ukraine’s allies support the grain deal, its agricultural successes have caused disquiet among its Eastern European neighbors.
A bumper 2023 harvest has led to increased Ukrainian grain shipments to Poland, Hungary, Romania and Bulgaria, all complaining that the increase has left domestic producers vulnerable.
In contrast, Ukrainian grain is especially appreciated in Spain and the Netherlands, where it is used for livestock feed.
The largest recipients of Ukrainian grain under the Black Sea Initiative have been China (24% of Ukrainian exports), Spain (18%), Turkey (10%), Italy (6%), and the Netherlands (6%).
Overall, about 44% of grain went to countries that the World Bank classifies as high-income, while 37% went to upper-middle-income countries. This results in savings of less than 20% in countries in the lower middle-income and low-income categories.
Nevertheless, the International Rescue Committee, a US-based aid agency, said the grain deal was a “lifeline for 79 countries and 349 million people on the front lines of food insecurity”.