Russia announced on Monday that it would not renew its participation in the agreement on Ukrainian grain exports. This initiative, launched in July 2022, has enabled more than a thousand ships to use a secure corridor and export cargo.
Moscow announced the end “de facto” of the agreement on the export of Ukrainian cereals on Monday, July 17, a few hours before its expiry. Russia will resume “immediately” their implementation when the demands of the Russian side are met, said Dmitry Peskov, spokesman for the Kremlin. Russia has officially notified Turkey, Ukraine and the UN of its refusal to extend this agreement under current conditions, added Maria Zakharova, spokeswoman for the Ministry of Foreign Affairs, quoted by the RIA Novosti agency. .
By 2022, this compromise had allowed the transfer of 32.9 million tonnes of grain destined for world markets, guaranteeing the safe passage of cargo ships to and from Ukrainian ports, despite the war. On the weekend of July 15-16, Turkey and the UN once again tried to convince Moscow to extend this agreement, which had been signed in July 2022 and then renewed twice. Franceinfo answers six questions raised by this decision.
1What does the end of the agreement mean?
This decision, in the very short term, means that Russia withdraws its security guarantees offered in the maritime corridor set up in the Black Sea. Moscow also announces the dissolution of the joint coordination center, based in Istanbul, which supervised inspections of ships to and from Ukraine, with international teams. In total, three Ukrainian ports were concerned by this agreement: Odessa, Chornomorsk and Yuzhni-Pivdennyi. But the initiative has recently been faltering… No more ships have left Ukraine since June 27, when the Turkish bulk carrier TQ Samsung had left Odessa.
So far, more than a thousand ships have managed to export their cargoes, with a peak in the summer of 2022. It is not certain that exports will resume any time soon. Ukrainian President Volodymyr Zelensky for his part affirmed that his country was ready to continue exports via the corridor, even without security guarantees. “We are not afraid”he said, according to comments reported by his spokesperson Serguiï Nykyforov on Facebook. But at this stage, it is still too early to consider the seriousness of such an option and to estimate the costs claimed by insurance companies under such conditions.
2How is this decision justified by Moscow?
Russia invokes three arguments to justify its decision. Russian President Vladimir Putin first denounced on several occasions the obstacles to the export of Russian food products and fertilizers, because of the sanctions put in place against the country. Moscow is also demanding that the Russian agricultural bank, Rosselkhozbank, be reintegrated into the Swift interbank settlement system. Moscow, then, accuses Ukraine of having used its ports of Odessa to carry out attacks “terrorists”.
>> What are Russia’s demands for extending the grain export deal?
The Russian President believes that “the main objective of the agreement, the delivery of cereals to countries in need, particularly on the African continent” n / A “not done”, according to the press release published on Saturday, after an interview with his Malagasy counterpart, Cyril Ramaphosa. The poorest countries received only 3% of grain exports, according to the ministry, compared to 70% for high-income countries.
3 Which countries have benefited from the agreement?
The United Nations classifies countries into four categories: low income, lower middle income, upper middle income and high income. According to its updated live data, 2.5% of exports went to the first category, 17.13% to the second, 36.65% to the third and 43.59% to the last. Taking into account the classification by category of economic development, 57% of exports went to developing countries, against 43% to developed countries.
But these data still need to be refined by product, in particular for wheat and corn (25.8 million in total). About half of the maize was sent to high-income countries, compared to 41% to upper-middle-income countries and 10% to low-income countries. And 38% of the wheat has gone to high-income countries, compared to 34% for upper-middle-income countries, 19% for lower-middle-income countries and 9% for low-income countries.
The UN had itself chartered ships to transport aid to the Horn of Africa and Yemen totaling 320,000 tons, financed from the budget of the World Food Program (WFP). In 2021, the Reuters agency points out, Ukraine was the main source of the WFP, providing it with 20% of purchases. “Russia is playing political games, and real people will suffercommented the American ambassador to the UN, Linda Thomas-Greenfield. A child in the Horn of Africa suffering from severe malnutrition, a mother who will no longer produce milk for her baby because she does not have enough to eat for herself”.
4Should we fear consequences on prices?
In the medium term, and “by rebound effect, this can push up prices to date, which are rather stable, or even down slightly”had declared on franceinfo the Minister of Agriculture Marc Fesneau, even before the Russian announcement. It remains to be seen how the world stock markets will react. US wheat prices rose on Monday morning (260 dollars per tonne), accelerating the trend observed in previous days, during the final negotiations shrouded in uncertainty. A far cry, however, from the $400 peaks seen in 2022.
“The main exporter on the world wheat market is quite simply Russia”recalls on franceinfo the economist Philippe Chalmin, professor emeritus at the University of Paris-Dauphine. “On the wheat market, which is the market for human food cereals, Ukraine still weighs relatively little”he also adds, recalling that corn, intended for animal feed, represented 30 of the 50 million tonnes of cereals exported by Ukraine last year.
Russia’s threats to suspend its participation in the initiative will lead to a “increasing price volatility”, underlined all the same the World Bank in June. UN Secretary General Antonio Guterres said hundreds of millions of people will “pay the price” of the Russian decision, while consumers are already “faced with a global cost of living crisis”.
5Is it possible to go through Eastern Europe?
This is already the case, in part, but the volumes concerned are already substantial. About a quarter of cereal production is already transported by rail, and another quarter by the river ports of the Danube. This influx of grain has destabilized the domestic market of Ukraine’s neighbours, saturating the silos. Five European countries (Poland, Hungary, Romania, Slovakia and Bulgaria) then decided unilaterally to ban transit. At the end of June, the European Commission had finally obtained the lifting of these import bans, in exchange for new safeguard measures granted to these States on wheat, corn, rapeseed and sunflower seeds. Cost of the envelope: 100 million euros, which is added to a previous one of 50 million euros, three months earlier.
6Are negotiations still possible?
This is not the first time that Russia has questioned this agreement, since it had already announced that it would suspend its participation at the end of October, before resuming its place in this joint initiative. At the time, however, Moscow did not send an official notification to Turkey. Despite the Kremlin’s announcement, Turkish President Recep Tayyip Erdogan said he was convinced that his “friend [Vladimir] Cheese fries” wanted to “continue the deal” allowing the export of grain from Ukraine to the Black Sea. Berlin, for its part, called “Russia to make possible the extension of the agreement” and to “not to make bear the consequences of this conflict to the poorest of the planet“.