The agreement on the export of grain from the ports of the Black Sea has ceased to be valid

The agreement on the export of grain from the ports of the Black Sea has ceased to operate, said the press secretary of the Russian President Dmitry Peskov. The deal expired July 17th. The last time it was extended for two months was the day before the expiration of the agreement on May 16. On the eve of July 16, according to the portal Marintraffic, a ship left the Ukrainian port of Odessa, which Reuters called the last one under the Black Sea agreements.

“Unfortunately, the part concerning Russia in this Black Sea agreement has not been implemented so far. Therefore, its action is terminated. As soon as the Russian part is completed, the Russian side will immediately return to the implementation of this deal,” Peskov said. The Russian authorities have repeatedly stated that they see no reason to extend the grain agreement until Russia’s conditions are met.

Earlier, President Vladimir Putin, in an interview with VGTRK journalist Pavel Zarubin on July 13, said that Moscow could suspend participation in the grain deal if all obligations to the Russian side were not fulfilled. He also called the agreement “a one-sided game.” The next day, Turkish President Recep Tayyip Erdogan said he expected to meet with Putin in Ankara in August and discuss with him, among other things, the terms of the Black Sea grain export agreement. But Peskov then said that there was no agreement to extend the deal, and no decision had been made on a visit to Turkey.

The grain deal was concluded on July 22 between Russia and Ukraine through the mediation of the UN and Turkey. The Ukrainian part of the deal implies the unhindered export of grain from the ports of Odessa, Yuzhny and Chernomorsk, and the Russian part involves easing restrictions on Russian agricultural exports. But the last points were never fulfilled, as repeatedly pointed out by the Russian side. In April, Moscow put forward five conditions for the extension of the Black Sea agreement, among them the reconnection of the Russian Agricultural Bank (RSHB) to the SWIFT settlement system, the bank was deprived of this system in June 2022.

On July 11, UN spokesman Stefan Dujaric said that UN Secretary General Antonio Guterres sent a letter to Putin containing a proposal to implement a grain deal. The purpose of this message, according to Dujaric, was to remove “barriers to financial transactions through Rosselkhozbank» while maintaining the export of Ukrainian grain.

One of the Russian conditions for extending the agreement is the restart of the Togliatti-Odessa ammonia pipeline. At the beginning of last month, he was damaged on the line of contact in the Kharkiv region. Moscow blamed the Ukrainian side for the accident. On July 7, the UN invited Russia and Ukraine to send technical specialists from the organization to assess the damage. But later, UN Deputy Secretary General for Humanitarian Affairs Martin Griffiths pointed out the impossibility of immediately restoring the work of the ammonia pipeline.

Wheat futures on the Chicago CBOT rose by 4.2% after Peskov’s statement, but fell by 13:00 Moscow time, the growth since the opening of the session by this time amounted to 3%.

It cannot be ruled out that Russia will return to the grain deal if its conditions are met, says Oleg Barabanov, program director of the Valdai Discussion Club. The key ones are the connection of Rosselkhozbank to SWIFT and the removal of obstacles to the export of Russian grain and fertilizers. At the same time, it is now important to pay attention to the African context of what is happening, since the Russia-Africa summit is scheduled for the end of July, Barabanov continues. It is important for Moscow to show its readiness to ensure the food security of the continent, including without a grain deal.

Russia no longer has formal restrictions, but it is unlikely to prevent traffic to the ports of Ukraine by force, and any actions can be expected from Kiev, including attacks on Russian ships with agricultural cargo, Barabanov believes. An important factor is that without the legal framework of a grain deal, insurance payments will rise sharply, he adds.

Moscow’s decision to withdraw from the grain deal is logical and justified, but, unfortunately, belatedly, says Denis Denisov, an expert at the Financial University under the Government of Russia. Throughout the grain deal, Western countries applied blatant double standards towards Russia and frankly lied that Ukrainian grain would feed poor African countries and help equalize world prices. At the same time, “in order to equalize the price, it was necessary to give Russia the opportunity to export grain,” the expert explains. Now the transaction can only be resumed if all Russian conditions are met, such as ship insurance and SWIFT unblocking for Rosselkhozbank.

There are no grounds for the grain deal to ever be restored, Vladimir Bruter, an expert at the International Institute for Humanitarian and Political Studies, believes. Grain trade in Ukraine after the closing of the transaction will be carried out along the Danube or by rail. There are no sanctions against Russian grain exports, but the logistics are broken, there is no insurance, as well as the connection of Russian banks to the SWIFT system. Last year showed that Russia does not need help to export grain, according to the expert, in case of need for some third-party support, Russia will use Turkey as a transshipment point.

The Russian Union of Grain Exporters issued a statement in connection with the completion of the grain deal, in which it confirmed the fulfillment of its obligations. “Russian grain exporters reaffirm their commitment to fighting world hunger. Russia is the largest supplier of wheat to the world market. We highly appreciate the trust of our customers and plan to continue supplying them with Russian grain at competitive prices, regardless of the development of events around the grain deal. All contractual obligations of Russian grain exporters will be fulfilled,” the statement said.

The conditions for the resumption of the deal will not be met by other countries, but for Russia, the closing of the deal itself will not lead to negative consequences, since it initially brought only damage to Russia, Arkady Zlochevsky, President of the Russian Grain Union, believes. According to the expert, such a deal should not have been concluded from the very beginning.

According to the expert, Ukraine declares that after the termination of the grain deal, it will ship grain in the sea, which, in principle, is among its capabilities. Under the control of Ukraine are some water areas, which the Ukrainians themselves blocked, fearing that Russian military ships would enter them.