EU has no easy choices to assist Ukraine in exporting its grain

This is reported by Politico. 

The EU is under pressure to move even more of Ukraine's stranded agricultural surplus after Moscow refused to rejoin a United Nations-backed agreement to allow Kyiv to transport grain across the Black Sea and unleashed a wave of attacks on Ukrainian seaports.

According to Brussels, the EU is capable of exporting all of the grain and other agricultural products piled up in Ukraine as a result of Russia's 17-month-long campaign of aggression and last week's decision to terminate the Black Sea Grain Initiative.

“We are ready to export by solidarity lanes almost everything that Ukraine needs to export,” EU Agriculture Commissioner Janusz Wojciechowski said on the sidelines of a meeting of EU agriculture ministers in Brussels this week.

Despite that confident declaration, the EU's solidarity lanes — overland corridors established to assist transit by road, rail, and inland canal — are under pressure. The group has struggled to increase capacity and is facing criticism from eastern member countries that are trapped with a Ukrainian supply surplus.

"The most promising route — via the Danube estuary — is in jeopardy after Russian air strikes earlier this week on the Ukrainian riverport of Reni, just a few hundred meters from the border with Romania, which is both a member of the EU and of NATO," the publication writes. 

NATO Secretary General Jens Stoltenberg responded by condemning Russia's dangerous and escalatory actions and urging Moscow to quit weaponizing hunger.

Based on Ukrainian data, the European Commission believes that more than 65% of grain exported through the solidarity lanes traveled along the Danube corridor in June. Cargoes can reach the Black Sea via the Sulina Channel or the Romanian Black Sea hub of Constanța, from the Ukrainian riverports of Reni and Izmail, Giurgiulesti in Moldova, and Galați in Romania. 

Option with the fewest drawbacks

Some think that the EU should invest in alternate routes.

"Lithuania has proposed increasing Ukrainian grain exports through Poland to its Baltic port of Klaipėda and four other ports in Estonia and Latvia. Together, the five ports are capable of handling 25 million metric tons of grain a year, Vilnius said in a letter to the European Commission, seen by POLITICO."

The idea is based on "green corridors" that would relocate customs, phytosanitary, and veterinary checks away from the Polish-Ukrainian border.

Agriculture Minister Mykola Solskyi backed Vilnius' proposal in a letter to EU Trade Commissioner Valdis Dombrovskis, but he specifically mentioned Hamburg and Rostock in Germany, Rotterdam in the Netherlands, Rijeka in Croatia, Trieste in Italy, and the Slovenian port of Koper in addition to the Baltic ports.

As long as the Russian military controls the Black Sea, transiting EU territory will be the most dependable option for Ukraine to export commodities.

The solidarity lanes have accommodated an increasing share of Ukraine’s grain exports: Between May 2022 and June 2023, 41 million tons of Ukraine’s grain exports passed along the corridors, while 32 million tons were exported via the now-defunct Black Sea grain deal, Commission spokesperson Adalbert Jahnz said, Politico reports. 

Grain transportation requires lots of money

However, transporting grain from Ukraine by train and road is costly and inefficient, making the country's largest export and a key economic lifeline less competitive on the global market. It will also necessitate infrastructural investment, not least to manage increasing traffic and the varied rail gauges used in the EU and Ukraine.

Despite defending alternate transit routes to EU ports, Ukraine stated that they are little used due to the complexity and cost of logistics in comparison to other routes.

Lithuania and Ukraine have both requested subsidies to make up the deficit. 

Countries such as Poland, Hungary, and Romania, through whom the grain would still have to transit, support the proposals in theory, but do not want to bear the costs alone.

"The idea is great, but who's going to pay for the transportation?" a diplomat from an eastern EU country told Politico of the Lithuanian proposal. 

Romania has enhanced the capacity of Constanța to accommodate the increased traffic, while Poland has invested over EUR 100 million in projects to increase rail capacity and establish a new border crossing with Ukraine.

However, the total expenditure required to realize the full potential of the solidarity lanes is anticipated to be billions of dollars.

"All eyes are on Brussels — but Commission officials have repeatedly warned that the EU’s infrastructure budget is underfunded. Having already earmarked €250 million for specific solidarity lane projects and announced €1 billion in joint funding, the EU's coffers are running dry," the publication notes. 

Even if the funds are discovered, the solidarity lanes have already come at a great political cost.

Whom to believe?

Following Russia's incursion last year, local farmers were outraged by the massive dumping of Ukrainian grain on Polish markets, and the presence of hundreds of Ukrainian truckers has stressed local transport businesses in both Poland and Romania.

The European Commission extended a restriction on Ukrainian grain exports to the two nations, as well as Bulgaria, Hungary, and Slovakia, in June until at least September 15. Ukrainian grain can be imported into the EU, but only if it does not become stopped in any of the five nations.

The five countries, led by Poland, say that the limits should be prolonged at least until the end of the year. According to them, the limits have allowed Ukrainian grain to freely transit to other destinations.

"Since the European Commission imposed the ban, transit through Poland has more than even doubled. We are willing to further assist in this transit," Polish Agriculture Minister Robert Telus said during the meeting in Brussels. 

Ukraine sees things differently, implying that Polish authorities are purposely stalling border checks. According to one government official, border shipments plummeted to 336,000 tons in May, less than half the quantity reported in November.