The grain deal rested on SWIFT: “There are no prospects”

UN Secretary General’s message to President Putin considered meaningless by experts

UN Secretary General António Guterres has suggested to President Vladimir Putin that a deal be extended for a few months to allow grain exports from Ukraine via the Black Sea. In his opinion, this would give the European Union time to connect the subsidiary of Rosselkhozbank to the international banking system SWIFT. Russian experts believe that Guterres’ initiative is doomed to failure as it is obviously unrealizable.

The grain deal, concluded under the auspices of the UN, expires this coming Monday, July 17th. Moscow threatened to withdraw from it because a number of requirements to remove obstacles to the supply of Russian grain and fertilizers abroad were not met. Among them is the reconnection of Rosselkhozbank to the international payment network (financial messaging system) SWIFT. Guterres sent a letter to Putin outlining measures to “ensure a continuous flow of Ukrainian grain across the Black Sea” and help Russian supplies of food and fertilizer reach their destinations, UN Secretary General Stéphane Dujarric said.

Earlier, UN representatives turned to the American bank JPMorgan Chase & Co with a request to start processing some payments for the export of Russian grain with assurances from the US government. Moscow, for its part, offered the European Union to create a division of the Russian Agricultural Bank (which has been under sanctions since June 2022) and connect it to SWIFT to conduct transactions. According to Western sources, the EU is now reviewing this initiative for compliance with sanctions and feasibility.

“This is not the first time Guterres is trying to breathe life into a half-dead deal,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies, “But there is no point in this: the second part of the agreement, related to the supply of Russian grain and fertilizers to the poorest countries, did not work. As for Rosselkhozbank, the problem lies in the legal interpretation. When representatives of Russia and the UN signed the second package in Istanbul (the so-called Memorandum of Understanding), it dealt with Rosselkhozbank itself, and not with its “daughter”. And now the proposal to create a branch is presented in the European press as an initiative of Moscow. It is also unclear how this will be implemented from a legal point of view, and what prevents the European Union from withdrawing Rosselkhozbank itself from sanctions, if everyone (including Brussels) is interested in extending the grain deal? All in all, a messy story.”

And while all issues have not been clarified, the deal has no special prospects, it is unlikely to be extended, Maslennikov believes. The only option is the goodwill of the Russian leadership, since there is no progress in terms of fulfilling Moscow’s conditions. The Togliatti-Odessa ammonia pipeline has not resumed its work, the problem of cargo insurance has not been resolved, transport logistics has not been unblocked, and the assets of a number of Russian companies have not been unfrozen. At the moment, the deal boils down to the fact that Russia guarantees security corridors for the passage of ships with Ukrainian grain. And that’s it. The further fate of the project will depend solely on political priorities and possible reciprocal steps, primarily from Turkey.

“The UN initiative looks like informational and economic blackmail,” says BitRiver Communications Director, economist Andrei Loboda. – They give us a connection to SWIFT, without which, by the way, the Russian banking industry manages quite successfully, and we give them an extension of the deal. In such a format of communication, it is unlikely that it will be possible to agree. If Russia stays in the deal, it will be on its own terms.”