NIAS Europe Studies

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NIAS Europe Studies
Ukraine: The failure of the Black Sea Grain Initiative

  Padmashree Anandhan

On 04 September, Turkish President Recep Tayyip Erdogan met Russian President Vladimir Putin. Following the meeting, an agreement was finalised to make Türkiye an exporter of Russian grains to Africa. According to the agreement, Russia will export free grains of up to one million metric tons to six countries in Africa with the help of Türkiye and Qatar. Putin stated: “We will be ready to consider the possibility of reviving the grain deal. And we will do it as soon as all the agreements on lifting restrictions on Russian agricultural exports are fully implemented.” Erdogan commented: “We believe that the initiative should be continued by eliminating its shortcomings…In this context, we have prepared a new proposal package in consultation with the UN. I believe that it is possible to get results.”

On 31 August, UN Secretary-General Antonio Guterres announced plans to send proposals to Russian Minister of Foreign Affairs Sergey Lavrov, intended to revive Ukraine’s grain export through the Black Sea.

Key issues
First, a profile on the Black Sea Grain Initiative. In July 2022, the deal was signed through mediation of the UN, Türkiye, Russia and Ukraine, allowing the setting up of a Joint Coordination Centre (JCC) in the city of Istanbul in Türkiye. It operated as a checkpoint for vessels to enter Ukrainian ports. The key aspect of the deal was to allow the export of Ukrainian grains and fertilisers through three Black Sea ports of Odessa, Chernomorsk, and Yuzhny. The deal has been extended twice with Ukraine exporting close to 32 million tons of wheat and corn. When the deal was subjected to a third renewal, citing the destinations of the grain export by Ukraine not being the Middle East or Africa, Russia withdrew.

Second, Russia’s assertion. Moscow’s objective was to lift the West’s sanctions over its grains and fertilisers. It also vouched for the supply of grains to developing countries mainly in Africa. Although the EU and the US introduced exemptions, Western companies refuse to trade with Russia. Besides, Russia demanded that its state agricultural bank should be reconnected to the global SWIFT payments system; its conditions not being met led to withdrawal. Despite such barriers, 60 million tons of grain were exported by Russia between July 2022 and June 2 023. Russia continues to stage frequent drone strikes against Ukrainian port infrastructure in the Odessa port, and thereby Ukraine’s alternate shipping route has become the river Danube.

Third, Türkiye’s balancing act. Türkiye has played a role at the economic level, laying new routes for Russia to circumvent sanctions imposed by the West while increasing its exports with an 86 per cent increase to Russia. In turn, the exported oil and gas from Russia are exported to the EU member states, resulting in a slow shift from its heavy debt to a 5.6 per cent growth rate as of 2022. Additionally, being a mediator between Russia and Ukraine, facilitating the grain deal through its port facilities, added revenue to its maritime industry. 
Fourth, the failure of the UN to revive the grain initiative. The UN opted for a wider approach to address the food crisis proposing for the International Maritime Organisation (IMO) to form a Black Sea Corridor. However, in terms of addressing the grain deal issue over the war in Ukraine, it lacked diplomatic efforts.

Impact of the withdrawal
First, the impact on Ukraine. The deal provided Ukraine’s exports a safe path through the maritime corridor and monitored the movement of the ships. Russia’s withdrawal amid the divide in Europe against the accumulation of Ukrainian grains may seem untimely. However, Ukraine has subsequently prepared for this. According to the UK's Agriculture and Horticulture Development Board (AHDB), 65 per cent of Ukraine’s grain is being exported through the ports of Izmail and Reni along the river Danube and Romania’s port of Constanta. After which it is taken across the Black Sea. Apart from this, Ukraine has also re-routed the export through road and rail.
 
Second, uncertainty over prices and food supplies. In response to Russia’s withdrawal from the deal, the prices of grains and oilseeds have increased. In the case of wheat and corn, the prices have decreased by 14 and 23 per cent respectively. Apart from the prices, the global food players in the market are also beginning to step in. Brazil, and the US, have reportedly increased exports of corn stocks close to 17 million tonnes.

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