Topline
Russia’s government terminated a deal with Ukraine to allow the safe passage of food grains through the Black Sea after it expired on Monday, a move that is likely to threaten global food security and drive up prices.
A photo shows the filling of the hold on the UN-chartered vessel MV Valsamitis while it is loaded to … [+] deliver 25,000 tonnes of Ukrainian wheat to Kenya and 5,000 tonnes to Ethiopia, at the port of Chornomorsk, east of Odessa on the Black Sea.
Key Facts
Kremlin spokesperson Dmitry Peskov announced the termination of the deal, saying Moscow will “promptly return to implementation of this deal,” once its side of the Black Sea grain agreement is fulfilled.
Russia has blamed Western sanctions for impeding its ability to export its own grain and fertilizer supplies, which it claims are also important for global food security.
While the West hasn’t sanctioned Russian grain and fertilizer exports, Moscow claims it is heavily impeded by sanctions on transport, shipping, finance and insurance, among other things.
The deadline UN-brokered deal expired on Monday after a 60-day extension agreed to by Russia in May ended.
President Recep Tayyip Erdoğan of Turkey—which has served as a key mediator between Russia and Ukraine—indicated he plans to talk to his Russian counterpart Vladimir Putin to discuss the resumption of the deal.
The suspension of the deal caused the U.S. benchmark Chicago Wheat Futures to surge more than 3% to $6.4 per bushel early on Monday.
Key Background
Russia and Ukraine are among the world’s largest exporters of several key foodgrains including wheat, corn and sunflower oil. Ukraine relies on ports in the Black Sea to export its food grains to parts of Asia and Africa, but this has been disrupted by Russia’s invasion. The start of the invasion last year triggered fears of global food shortages and led to a major surge in food inflation. The UN’s Food Price Index, which tracks the price of 55 food commodities across global markets in U.S. dollars, rose to a record high last year. In June, the index stood at 122.3 points, down 11.6% since the start of the grain deal last year.
News Peg
The reinstatement of the Russian agricultural bank Rosselkhozbank into the SWIFT international payment network has been a key demand made by Moscow during the deal negotiations. Last week, U.N. Secretary-General Antonio Guterres said he had offered to allow the agricultural bank to rejoin SWIFT in return for an extension of the Black Sea deal. However, Reuters reported that the European Union was not keen on allowing this to happen. The ouster of Russian banks from the Belgium-based global payments network was a result of EU sanctions. Moscow has repeatedly complained that the grain deal has been implemented unevenly—only to Ukraine’s benefit. Russian officials have also dismissed the West’s argument that Russian grain and fertilizer exports haven’t been sanctioned by claiming the measures have prevented private shipping firms and insurers from handling Russian grain exports.
Big Number
32 million tonnes. That is the total volume of “food commodities” have been exported from Ukraine’s Black Sea ports, since the deal went into effect last year, according to the United Nations.
Further Reading
Russia halts wartime deal allowing Ukraine to ship grain. It’s a blow to global food security (Associated Press)
