Russia rejects EU bank compromise as expiry of Black Sea grain deal looms

Moscow says there is no replacement for Swift payments system

Commercial ships that are part of the Black Sea grain deal wait to cross the Bosphorus strait. Reuters
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Russia has restated a demand for its national agricultural bank to be reconnected to the global Swift payments system to avert the collapse of a Black Sea grain deal, rejecting a reported EU subsidiary proposal.

The Financial Times reported on Monday that the EU was considering a proposal to allow Russia's Agricultural Bank to set up a subsidiary that could connect to the Swift network, from which it was cut off after its invasion of Ukraine.

But Russian Foreign Ministry spokeswoman Maria Zakharova dismissed the idea as “deliberately unworkable”, saying it would take many months to set up such a unit and another three months to connect to the payments system.

Moscow has repeatedly threatened to withdraw from the deal that allows grain to sail from blockaded Ukrainian ports on the Black Sea, providing a critical lifeline for global food supplies.

Russia briefly left the agreement in October after an attack on its fleet in the area.

The UN has expressed increasing worry the grain deal and an agreement on fuel exports will not be renewed, even suggesting officials may travel to Russia in a bid to salvage the agreement.

"We will consider going to Moscow in the days that are left but that has not been confirmed yet," Rebeca Grynspan, head of the UN's trade and development agency, told reporters in Geneva on Wednesday.

"No doubt we are worried because the two agreements signed in Istanbul are very important for food security and for the developing countries in the global south.

"We need both, to continue bringing prices down and have stable markets of food and fertilisers in the world ... they remain our main concern and we hope that we can ensure their extension for the benefit of the most vulnerable countries and the most vulnerable people in the world."

Ms Zakharova also rejected a UN attempt to create an alternative payment channel between the bank, also known as Rosselkhozbank, and JP Morgan.

“There is no real replacement for Swift, and cannot be,” she said on Tuesday.

Earlier this week, Russia said there was no reason for the deal to continue beyond July 17, as it cited unmet demands, including those concerning grain and fertiliser exports.

The UN says the deal allows grain to be shipped to 45 countries around the globe and is “a lifeline for global food security”.

An end to the deal would spell disaster for many poorer nations, aid agencies have warned, particularly in Africa, where famine and food insecurity are already rife.

Updated: July 05, 2023, 1:15 PM