Black Sea grain deal to expire on Monday unless Russia agrees extension

Moscow threatens to leave over claims its grain and fertiliser exports have not been met

Ukrainian farmers harvest grain in the Odesa region of south Ukraine in June. EPA
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A pact that has allowed the safe Black Sea export of grain from Ukraine for the past year will expire at the end of Monday if Russia does not agree to extend the deal.

The agreement was brokered by the UN and Turkey to combat a global food crisis worsened by the war.

The last ship left Ukraine under the agreement on Sunday. Russia's February 2022 invasion and blockade of Ukraine's Black Sea ports sent global grain prices soaring. Ukraine and Russia are among the world's top grain exporters.

Nearly 33 million metric tonnes of corn, wheat and other grains have been exported by Ukraine under the arrangement.

Russia has threatened to quit the pact because it said its demands to improve its own grain and fertiliser exports have not been met. Russia also has complained that not enough grain has reached poor countries.

The UN has argued that the arrangement has benefitted those states by helping lower food prices more than 20 per cent globally.

Foreign Minister Sergey Lavrov said on Thursday that Russia had already begun talking to Turkey about a plan to ensure that Russian wheat, possibly processed by Turkey, reaches countries in need, regardless of the Black Sea deal's fate.

The UN Security Council is due to discuss Ukraine at a meeting on Monday chaired by British Foreign Secretary James Cleverly. The UK is president of the 15-member council for July. Several other European foreign ministers are also expected to attend the meeting.

The UN said its World Food Programme has procured 80 per cent of its wheat so far in 2023 from Ukraine, up from 50 per cent in 2021 and 2022.

The World Food Programme has shipped about 725,000 metric tonnes of Ukrainian wheat to Afghanistan, Sudan, Djibouti, Ethiopia, Kenya, Somalia and Yemen to fight hunger.

The body has said the deal so far has supplied grain to 45 countries in three continents – 46 per cent to Asia, 40 per cent to Western Europe, 12 per cent to Africa and 1 per cent to Eastern Europe.

Russia has agreed three times in the past year to extend the Black Sea deal, but also briefly suspended its participation at the end of October in response to a drone attack on its fleet in Crimea.

To convince Russia to agree to the Black Sea deal, a three-year deal was also struck in July last year, under which UN officials agreed to help Russia get its food and fertiliser exports to foreign markets.

While Russian exports of food and fertiliser are not subject to western sanctions imposed after Russia's invasion, Moscow has said restrictions on payments, logistics and insurance have amounted to a barrier to shipments.

A key Russian demand has been for Rosselkhozbank, the Russian Agricultural Bank, to be reconnected to the Swift international payments system. The bank was cut off from Swift by the EU in June 2022 over Russia's invasion.

UN Secretary General Antonio Guterres made a final effort on Tuesday to convince Russian President Vladimir Putin to extend the Black Sea grain deal for several months in exchange for the EU connecting a subsidiary of Rosselkhozbank to Swift for grain and fertiliser transactions, sources said.

Mr Guterres is still waiting for a response from Mr Putin, the UN said.

As a workaround to the lack of access to Swift, UN officials already have persuaded US bank JPMorgan Chase and Co to begin processing some Russian grain export payments with reassurances from the US government.

The UN is also working with the African Export-Import Bank to create a platform to help process transactions for Russian exports of grain and fertiliser to Africa, a UN trade official told Reuters last month.

Updated: July 17, 2023, 6:56 AM