Russia pulls out of Ukraine grain deal: What's next?
July 17, 2023
Once labeled by UN Secretary-General Antonio Guterres as a "beacon of hope," the grain agreement between Ukraine and Russia may be about to collapse. For months, the agreement — also known as the Black Sea Grain Initiative — has been repeatedly extended, but now Russia wants to let it expire in July, which could have global consequences.
Why is the agreement important?
Ukraine is one of the world's largest grain suppliers. Ukrainian grain feeds 400 million people worldwide, according to World Food Program figures. When Russia's full-scale invasion of Ukraine began in February 2022, many countries feared a famine. In Africa and the Middle East in particular, a hunger crisis threatened.
Food prices had already risen before the start of the Ukraine war, but the Russian invasion made them skyrocket worldwide. In addition, the Russian blockade of the Black Sea meant millions of tons of grain were stuck in Ukrainian silos, in danger of rotting. According to the European Union "maintaining Ukrainian grain supplies remains critical to global food security."
What could happen if the deal expires?
If Russia does not agree to extending the deal, it's unclear whether Ukraine will continue to ship the same quantities of grain to the world. The high cost of insuring the ships could be a major problem. Ships that want to cross the Black Sea already have to be insured for thousands of dollars. Shipping companies might be reluctant to send their ships through the war zone if there is no Russian approval.
Transporting grain overland could also become difficult. Since the beginning of the war, Ukraine has exported large quantities of grain via eastern EU countries — but there are too few freight carriages to export all of Ukraine's grain over land.
In addition, farmers in some eastern EU countries resent Ukrainian supplies being shipped through their countries, saying it undercuts local supplies and effectively takes away markets for their own crops. In reaction, the European Union imposed import restrictions earlier this month that stipulate grain can be transported through Bulgaria, Hungary, Poland, Romania and Slovakia but cannot be sold in these countries.
How does the current deal work?
The agreement regulates grain exports from the Ukrainian-controlled Black Sea ports of Odesa, Chornomorsk and Pivdenny. Ships must cross the Black Sea along an agreed humanitarian sea corridor toward Istanbul. Ships en route to and from Ukrainian ports are checked at a Turkish-controlled base by a special team of Russian, Turkish, Ukrainian and UN inspectors.
Two UN task forces ensure that Ukrainian grain can be shipped across the Black Sea, and they also facilitate the export of Russian food and fertilizer products.
How successful was the agreement?
The Black Sea Grain Initiative and EU solidarity corridors to support Ukrainian exports have helped food prices fall and stabilize. More than 30 million tons of grain and other food products have been exported up to May 2023 thanks to the agreement.
Poorer countries, in particular, have benefited: Around 64% of wheat went to developing countries, while corn was exported almost equally to developed and developing countries. In March, though, several media outlets reported that less and less grain was being shipped from Ukraine.
Overall food exports made possible by the agreement fell by about three-quarters in May compared with October last year, as more shipping companies shied away from sending ships on the dangerous route. But strict regulations also make it difficult for ships to pass through quickly.
"The UN secretary-general is disappointed by the slowing pace of inspections and the exclusion of the port of Yuzhny/Pivdennyi from the Black Sea Initiative," Guterres' deputy spokesperson, Farhan Haq, said in a statement on Tuesday.
The Russian side has been complaining that its demands are not being met and that Western sanctions are hindering the export of its own agricultural products. President Vladimir Putin argued to an African peace delegation earlier this week that the grain agreement did not solve the problems African countries had with high global food prices, because only 3% of Ukraine's grain exports go to the poorest countries.
How important is the Black Sea?
The Black Sea is a strategic crossroads between southeastern Europe and Asia, a region where maritime, continental, geostrategic and economic interests come together.
It is the only opportunity for Ukraine to export its grain to the world by sea. Access to the open sea, and thus an opportunity to access other export routes, is only possible via the Dardanelles and the Bosporus — both straits controlled by Turkey.
Countries that border the Black Sea have an interest in the routes but the inland sea also plays a large economic role for China. As part of Beijing's New Silk Road project, the sea route across the Black Sea is supposed to allow for a better Chinese-European flow of goods.
This article was originally written in German.