A crucial agreement that facilitated the safe export of Ukraine’s grain from the Black Sea region expired on Monday as Russia withdrew from the deal, citing concerns over ship safety. The United Nations expressed its dismay, warning that this move would have severe repercussions for people in need worldwide.
Russia suggested that if its demands regarding grain and fertilizer exports were met, it might reconsider the Black Sea agreement. However, U.N. Secretary-General Antonio Guterres confirmed that a U.N. pact enabling Russia’s shipments over the past year had also been terminated.
“Russia will only consider restoring the deal upon receiving concrete results, rather than mere promises and assurances,” stated Russia’s foreign ministry.
Moscow informed the International Maritime Organization (IMO), the U.N. shipping agency, that it was revoking its “guarantees for the safety of navigation” and would take necessary measures to counter perceived threats from the Ukrainian government in the area.
Insurance companies are now assessing whether to suspend coverage for ships willing to sail to Ukraine. The response in the grains market was relatively moderate, with U.S. wheat futures rising by approximately 3%, while U.S. corn futures increased by nearly 1%.
“One German trader mentioned that there is a prevailing belief in the market that Russia and the EU possess ample wheat supplies to meet global demand in the coming months, as harvests arrive.”
The Black Sea deal, brokered by the U.N. and Turkey in July of the previous year, aimed to address a global food crisis exacerbated by Russia’s invasion of Ukraine in February 2022. Both Ukraine and Russia are major grain exporters.
Ukrainian President Volodymyr Zelenskiy emphasized the importance of maintaining the Black Sea grain export corridor, according to his spokesperson.
“Today’s decision by the Russian Federation will significantly harm people in need across the world,” expressed U.N. chief Guterres during a press conference.
Guterres affirmed that the U.N. would continue its efforts to ensure unhindered access to global markets for food products and fertilizers from Ukraine and Russia.
Linda Thomas-Greenfield, the U.S. Ambassador to the United Nations, condemned Moscow’s action as “an act of cruelty.”
FINAL SHIP DEPARTS
Under the agreement, Ukraine exported nearly 33 million metric tons of corn, wheat, and other grains. The final ship departed from Ukraine on Sunday, marking the conclusion of the deal.
To persuade Russia to participate in the Black Sea agreement, a three-year memorandum of understanding was reached in July 2022, with U.N. officials offering assistance to Russia in exporting its food and fertilizers to foreign markets.
Russia’s main demands included resuming ammonia exports via a pipeline to the Ukrainian port of Odesa and reconnecting its state agricultural bank, Rosselkhozbank, to the SWIFT international payments system. The bank was disconnected by the European Union in June of the previous year following the invasion.
Guterres mentioned on Monday that the U.N. had successfully established a “custom payments mechanism” for the Russian Agricultural Bank through JPMorgan Chase & Co (JPM.N), and had recently brokered a proposal with the European Commission to enable a Rosselkhozbank subsidiary to regain SWIFT access.
However, he indicated that all these efforts would be terminated due to Russia’s withdrawal from the Black Sea deal, which also nullified its export agreement with the U.N., wherein Moscow had committed to “facilitating the unimpeded export of food, sunflower oil, and fertilizers from Ukrainian-controlled Black Sea Ports.”
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