Black Sea grain deal to expire Monday if Russia quits

By Michelle Nichols

UNITED NATIONS (Reuters) – 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 agreement brokered by the United Nations and Turkey to combat a global food crisis worsened by Russia’s invasion of its neighbor.

The last ship left Ukraine under the deal 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 tons of corn, wheat and other grains have been exported by Ukraine under the arrangement.

Russia has threatened to quit the pact because it has said its demands to improve its own grain and fertilizer exports have not been met. Russia also has complained that not enough grain has reached poor countries. The United Nations has argued that the arrangement has benefited those states by helping lower food prices more than 20% globally.

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

The United Nations has said its World Food Program has procured 80% of its wheat so far in 2023 from Ukraine – up from 50% in 2021 and 2022. The World Food Program has shipped about 725,000 metric tons of Ukrainian wheat to Afghanistan, Sudan, Djibouti, Ethiopia, Kenya, Somalia and Yemen to fight hunger.

The world body has said the deal so far has supplied grain to 45 countries in three continents – 46% to Asia, 40% to Western Europe, 12% to Africa and 1% 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 2022 under which U.N. officials agreed to help Russia get its food and fertilizer exports to foreign markets. While Russian exports of food and fertilizer 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 the Russian Agricultural Bank (Rosselkhozbank) to be reconnected to the SWIFT international payments system. The bank was cut off from SWIFT by the European Union in June 2022 over Russia’s invasion.

U.N. 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 fertilizer transactions, sources said.

Guterres is still waiting for a response from Putin, according to a U.N. spokesperson.

As a workaround to the lack of access to SWIFT, U.N. officials already have gotten U.S. bank JPMorgan Chase & Co (NYSE:) to start processing some Russian grain export payments with reassurances from the U.S. government.

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

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