Will UN agree to Russia's terms in exchange for grain deal?

July 17 is the last day of the grain deal, under which Ukraine was able to safely export agricultural products from seaports. Russia announced that it would withdraw from the grain deal until the parties fulfill Moscow’s terms. So in the near future, Ukrainian farmers who have just started harvesting will not be able to export grain via the Black Sea. Is there an alternative to the grain deal and could the attack on the Crimean bridge be a Russian provocation - read more in the Espreso article.

Crimean bridge blasts on the last day of the grain deal

"The extension of the grain deal is currently a matter of political negotiations. Today, experts cannot fully assess what the explosion on the Crimean bridge was about. Is it Ukraine or is it Russia as part of one of its strategies that only Moscow understands? Therefore, we cannot rule out any retaliatory steps. In this situation, anything is possible, because the stakes have risen," says Yaroslav Zhalylo, deputy director of the National Institute for Strategic Studies. 

"Of course, blowing up the bridge means stopping the supply of weapons to Crimea, and it also puts psychological pressure on the enemy, so from a military point of view, Ukraine would benefit from a strike on the Crimean bridge. From an economic point of view, I don't think we needed this blowing up today, because it was the day when the decision to extend the grain deal was to be made. But the military has its own logic, and now their logic is much more important than the economic one," he added.

Photo: Reuters

Operational Command South's press center head Natalia Humeniuk suggested on Suspilne TV that the explosion on the Crimean bridge could be a Russian scenario implemented before the extension of the grain deal and in anticipation of a Ukrainian counteroffensive in the south.

By the way, this is not the first time that explosions in Crimea have coincided with negotiations on the grain initiative. On April 24 this year, Russia also claimed that surface drones attacked Black Sea Fleet ships in Crimea. The very next day, April 25, the Russian Defense Ministry accused Ukraine of allegedly violating its obligations under the grain deal and refused to approve the movement of ships through the grain corridor.

What does Russia want in exchange for the grain deal to be extended?

In order to continue the operation of the grain corridor, the Russians demand that Rosselkhozbank be reconnected to the SWIFT international interbank system, that the Togliatti-Odesa ammonia pipeline operation is resumed, and that foreign assets and accounts of Russian companies related to the production and transportation of food and fertilizers be unblocked.

The UN, which is one of the parties to the agreement, was ready to agree to some of Russia's demands. In particular, on July 12, they issued a press release saying that the Secretary-General had sent a letter to President Vladimir Putin. In it, he proposed to ensure the export of Ukrainian grain across the Black Sea in exchange for the removal of obstacles affecting financial transactions through the Russian agricultural bank. António Guterres also emphasized the importance of fertilizer supplies from the Russian Federation.

"It is difficult to predict how the situation will develop further. Russia is under a lot of pressure from the international community. It is possible that they will continue to bargain," says Yaroslav Zhalylo. "It is also difficult for Russia to simply stop the deal, given that they are trying to have allies at least in African countries that depend on this agreement,” he added.

At the same time, Ukrainian President Volodymyr Zelenskyy said in an interview with African journalists on July 17 that he had ordered the Ministry of Foreign Affairs to prepare official signals to the United Nations and Turkey:

"Even without Russia, we need to do everything possible to use this Black Sea corridor. We are not afraid. We have been approached by companies that own ships. They said that they are ready, if Ukraine lets go and Turkey lets them through, then everyone is ready to continue supplying grain," Zelenskyy said."

Turkish President Recep Erdogan has already said that he will discuss the extension of the grain deal with Putin during a meeting in August. China has also announced its readiness to join negotiations on the extension of the grain initiative. Both countries are among the five largest importers of Ukrainian food, so they are interested in continuing the initiative.

Is there an alternative to the grain corridor?

Even before the full-scale invasion, food accounted for a significant portion of Ukraine's exports. During the war, food accounts for the lion's share of Ukraine's foreign exchange earnings. In the first three months of 2023, Ukraine exported USD 3.2 billion worth of grain. This is 30.7% of Ukraine's total merchandise exports. A significant portion of this was exported through the grain corridor.

"The grain corridor is the most efficient export channel in the current environment compared to all other alternative channels. It is the easiest and cheapest way to deliver our products to customers," says Svitlana Lytvyn, an expert at the Ukrainian Agribusiness Club. 

"Routes across the Danube and western borders are also important, but they are more expensive and have limited capacity. In June, when the grain deal was in effect, Ukraine exported 5.3 million tons of food. Of this, 2 million tons went through the grain corridor, the same amount across the Danube and on through the port of Constanta, and the rest through the western borders (by rail and road). In the months when it worked more or less well, we were able to export 4 million tons through this channel," she added.

According to the expert, this year Ukraine expects a smaller grain harvest even compared to last year. Due to export problems, many farmers have reoriented themselves and switched to growing oilseeds, which have lower yields than grain. In addition, we have less carry-over food from the previous season than we had in July last year, so the suspension of exports through the Black Sea ports is not critical. On the other hand, interruptions in exports lead to Ukraine losing established sales channels. And Ukrainian suppliers are often replaced by companies from Russia.

Photo: gettyimages

According to Yaroslav Zhalylo, even though the decline in Ukrainian grain exports due to the suspension of the grain initiative affects Ukraine's economy as a whole, not just the agricultural sector, we should not forget that this is also a matter of global food security.

"In this situation, Ukraine is not just realizing its own interests. It is playing an important role in global food security. It is important for us to play this role because it is an opportunity to work more effectively and fully with the international community. The decline in exports from Ukraine has a negative impact on global food security, so the international community is putting pressure on Russia. Russia's behavior in this situation is to bargain for preferences as much as possible in response to the extension of this agreement. It is possible that some of its conditions will be fulfilled, given Guterres' strange statement," says Yaroslav Zhalylo.

What is known about the grain deal

The agreement to unblock Ukrainian grain exports was signed in Istanbul in 2022. At the time, Mykhailo Podolyak, an advisor to the President's Office, assured that Ukraine was signing an agreement with Turkey and the UN and was committed to them. Russia signed a mirror agreement with Turkey and the UN. Since then, the grain agreements have been extended several times.

The very next day after the grain deal was signed, Russia launched a massive missile attack on Odesa, which caused a fire in the port.

On August 1, 2022, Ukraine's Minister of Infrastructure Oleksandr Kubrakov announced that the first ship under the initiative with 26,000 tons of Ukrainian corn had departed from Odesa.

A year later, on June 5, the Russian Federation said it saw no prospects for extending the agreement in July, and on June 22, the Ukrainian Foreign Ministry said it did not see the Russians' readiness to continue the grain initiative.

Doubts about the continuation of the grain deal were also voiced in the UK on July 4. On July 5, the UN announced its readiness to send a representative to Moscow to "save the grain deal."

Turkish President Recep Tayyip Erdogan said on July 8 that his country is working on extending the grain deal for two years. UN Secretary-General Antonio Guterres has offered Russian President Putin to extend the grain deal in exchange for reconnecting Rosselkhozbank to SWIFT, which was one of the Kremlin’s demands.

On July 12, Turkey’s Erdogan said that he had received proposals from Putin to extend the grain deal.

On July 13, Putin said Russia will extend the grain deal when its demands are met. 

On the morning of July 16, the last vessel loaded with Ukrainian agricultural products under the grain initiative left the port of Odesa.

On July 17, Russian presidential spokesman Dmitry Peskov announced the actual termination of the grain deal. At the same time, Turkish President Recep Erdogan announced his intention to discuss the extension of the grain deal with Putin.