Halted. Russia suspends Ukraine grain export deal indefinitely

Bloomberg Updated - October 31, 2022 at 03:11 PM.

The move comes after Russia accused Ukraine of carrying out an attack on its Black Sea fleet off Sevastopol, Crimea, using drones and unmanned marine vessels 

FILE PHOTO: A crew member of the Panama-flagged bulk carrier ship, the Navi Star stands on the bulk of the ship as it berths at Foynes Port delivering 33,000 tonnes of Ukrainian corn to Ireland, after departing Odessa following the formation of the Black Sea Grain Initiative, in Foynes, Ireland August 20, 2022.  | Photo Credit: CLODAGH KILCOYNE

Russia said it’s suspending the deal to allow Ukrainian grain exports from Black Sea ports after drone strikes against its naval vessels, in a move that threatens to exacerbate the global food crisis and send prices soaring again. 

The safe-passage agreement, brokered in July by the United Nations and Turkey, has been crucial in allowing the flow of millions of tonnes of grain that had piled up in Ukraine since Russia’s invasion, in addition to new crops being harvested. Negotiations had been underway about extending the deal beyond the initial period that ends on November 19.

Shortly after the Defense Ministry’s statement was posted on Telegram, citing a “terrorist act carried out by the Kyiv regime,” air raid sirens sounded across Ukraine, highlighting the potential for new Russian reprisals. 

Following the previous high-profile strike attributed to Ukraine, an explosion on the Kerch Strait Bridge between Crimea, which was annexed by Putin in 2014, and mainland Russia, Kremlin forces unleashed a barrage of attacks against Ukraine’s electricity grid and other key infrastructure. 

Russia’s Foreign Ministry in a statement called the suspension “indefinite,” and said its representatives at the coordination centre in Istanbul had been sent relevant instructions.

“The Russian side cannot guarantee the safety of civilian dry cargo ships participating in the ‘Black Sea initiative’ and suspends its implementation from today for an indefinite period,” the Foreign Ministry said.

In response, Ukrainian Foreign Minister Dmytro Kuleba said Moscow was using “a false pretext to block the grain corridor,” and that Ukraine had “warned” that Russia would ruin the initiative. 

The move came hours after Russia accused Ukraine of carrying out an attack on its Black Sea fleet off Sevastopol, Crimea, using nine airborne drones and seven unmanned marine vessels. 

Ukraine hasn’t confirmed participation in the drone strikes. Moscow also accused “British specialists” of helping in the attack, which the UK Ministry of Defence called “false claims on an epic scale.” 

Russia earlier said the vessels targeted were involved in ensuring security for the Black Sea grain initiative, a claim that can’t be verified. Moscow said there had been only minor damage to a navy minesweeper.

Farmers and grain traders have been anxiously watching the discussions to extend the export deal, which was hailed in July as a vital step to help ease the global food crisis. Forward sales were already drying up on worries that the agreement would lapse, and Ukraine had also raised concerns about a growing backlog of ships waiting for inspection as part of the agreement.

A prolonged suspension could once again send shocks through global crop markets. While grain prices have eased in recent months, the soaring dollar has driven up prices in many countries, leaving importers struggling to make payments and raising the threat of shortages. 

To be sure, Ukraine is also exporting crops by land and river, but the safe-passage deal has been crucial in significantly increasing the flow of grain from one of the world’s most important producers. Some 9 million tons of goods have left Ukrainian Black Sea ports since the first vessel sailed Aug. 1.

The UN is “in touch with the Russian authorities” about the suspension, said Stephane Dujarric, the spokesman for Secretary General Antonio Guterres. 

“It is vital that all parties refrain from any action that would imperil the Black Sea Grain Initiative, which is a critical humanitarian effort that is clearly having a positive impact on access to food for millions of people around the world,” he said. 

Russian President Vladimir Putin has repeatedly complained about the deal, saying not enough shipments were being sent to poor nations. Russia has also said its own grain and agricultural goods were not being allowed the same access to global markets.

However, claims that developing nations aren’t benefiting from the safe-corridor deal aren’t backed up by the data, which show a considerable segment of the shipments have gone to these countries. Lower global prices for grains from the resumption of Ukrainian exports also have an overall positive impact for buyers. 

Russia recently said that some of the hundreds of ships involved in the programme were carrying contraband goods; the UN has said no unauthorised cargoes have been recorded.

Andriy Yermak, head of Ukrainian President Volodymyr Zelenskiy’s office, called Saturday’s decision to pull out of the grain shipment deal “the agony of evildoers.”

Zelenskiy last week accused Russia of deliberately slowing down grain exports from Ukrainian ports in a bid to prolong a global food crisis, with more than 150 ships waiting to gain access to Black Sea ports. 

Published on October 31, 2022 09:38

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