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Black Sea Corridor deal is all but dead

The Black sea Corridor agreement between Russia and Ukraine, brokered by the UN and Turkiye last July and renewed for shortening periods three times since, has effectively died, a slow rather than sudden death.

Russia said on Friday June 30th that it saw no reason to extend the Black Sea grain deal beyond July 17th. Russian foreign minister Sergei Lavrov said that the West had acted in an “outrageous” way over the agreement. He also promised that importers of Russian grain in the developing world would not lose out. One of Russia’s many complaints about what it has come to see as a skewed deal was that a promise that grain would go mainly to developing countries was not fulfilled, with developed nations, mostly in the EU, being the main beneficiaries of the reinstated grain exports.

The original deal allowed food and fertilizer to be exported from three Ukrainian ports – Chornomorsk, Odesa and Pivdennyi (Yuzhny).

Lavrov said that one of the last straws for Russia was an attack on the Togliatti-Odesa ammonia pipeline, an attack he blamed on Ukraine.

The UN, which has made many statements “urging” Russia and Ukraine to keep the deal going, but without offering anything likely to make Russia agree, noted on Friday “with concern” that no new ships had been registered under the Black Sea deal since June 26th, even though 29 vessels had made applications. Once again it called on all parties to “to commit to the continuation and effective implementation of the agreement without further delay.”

UN spokesperson Farhan Haq said there were currently only 13 ships either loading in Ukrainian ports or traveling to and from Istanbul.

Haq said that “the parties must ensure that additional vessels are allowed to sail the maritime humanitarian corridor in the Black Sea, which serves as a global lifeline for food security”.

Lavrov said that “if the Black Sea Initiative ceases to operate, we will provide grain deliveries of a comparable or larger size to the poorest countries at our own expense, free of charge”.

Between 2018–2020, Africa imported $3.7bn in wheat (32% of total African wheat imports) from Russia and $1.4bn from Ukraine (12% of total African wheat imports), according to the United Nations.

Another issue that has led Russia to see no point in continuing with the agreement was its perception that the west had reneged on the UN’s promise to help Russia overcome any obstacles to its own food and fertilizer shipments, which were not subject to sanctions. Ukraine pulled back from what had been seen as earlier guarantees re fertilizer shipments from Russia, terming them as aspirations rather than promises.

Russia meanwhile said that other handicaps, mainly around financial matters such as banking links and insurance, had effectively made the resumption of fertilizer exports all but impossible. Russia’s specific demands this time round were that Russian Agricultural Bank (Rosselkhozbank) should be reconnected to the SWIFT payment system, and that supplies of agricultural machinery and parts to Russia be resumed. Finally, it wanted restrictions on insurance and reinsurance to be lifted.

Other demands include the resumption of the Togliatti-Odesa ammonia pipeline, through which Russia could pump the chemical to Ukraine’s main Black Sea port, and the unblocking of assets and accounts of Russian companies involved in food and fertilizer exports. Russia has said that there had been no progress whatsoever on any of these issues.

Source: Insurance Marine News 3rd July 2023

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