What is the Black Sea Grain Deal? Everything You Need to Know
11:47 17.07.2023 (Updated: 10:50 03.08.2023)
© AP Photo / Emrah Gurel
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The Black Sea Initiative has effectively been suspended, the Kremlin announced on Monday. What is the deal? How did it come about? What are its terms? Check out Sputnik's explainer, probably the most comprehensive one available on the internet, to become an instant expert on the subject.
Grain Deal's Origins
Due to Russia and Ukraine's status as major food producers and exporters, the year-and-a-half long, US and NATO-provoked and sponsored conflict between the two countries has had a notable impact on global food security.
Russia is single-handedly the largest supplier of wheat to international markets, and Ukraine the fifth largest prior to last year's escalation. According to the United Nations, combined, the countries account for as much of 19 percent of global barley supply, 14 percent of wheat supply and 4 percent of corn supply, or over a third of total global cereal exports. Russia and Ukraine also lead the world in rapeseed oil production and exports, and jointly command 52 percent of the sunflower oil market. Russia has also consistently been among the world leaders of the global fertilizer market, accounting for 15.5 percent of total exported fertilizers in 2022.
According to the UN's Food and Agricultural Organization (FAO), when the Donbass crisis escalated into a full-on NATO-Russia proxy war in Ukraine over a year ago, global food prices jumped a whopping 12.6 percent in March 2022 alone, an all-time high since the FAO's food price index was created in 1990.
After Russia's special military operation started, Western powers accused Moscow of deliberately obstructing Ukrainian grain supplies to international markets - an accusation which Russia vehemently denied. In fact, Moscow said, it was Kiev that had created obstacles to grain exports. In addition to setting grain on fire at the Mariupol Port in the Sea of Azov, the Ukrainian military systematically mined Black Sea waters near the country's coastline, which made grain exports to global markets by sea essentially impossible. Russian President Vladimir Putin assured at the time that Russia was not obstructing grain exports from Ukraine, and if Kiev were to de-mine the ports, grain ships would be able to leave them without any problems.
On May 1, 2022, UN World Food Program German office director Martin Frick reported that nearly 4.5 million tons of grain had been held up at Ukrainian ports due to the conflict.
Simultaneously, Russian grain and fertilizer exporters were refused port services, denied the means to be able to pay for shipments or provide insurance for them as Western countries piled on sanctions and threatened foreign countries and companies with crushing secondary restrictions.
A Plan Forms
In mid-May 2022, UN Secretary-General Antonio Guterres proposed the easing of restrictions on Russian fertilizer suppliers in exchange for Russian assurances on the security of grain-laden ships leaving Ukrainian ports. The UN proposal to resolve the crisis also included plans to de-mine Ukraine's Black Sea coastline to allow grain ships to leave ports.
The UN proposal received the support of China and Turkey, with Ankara expressing willingness to provide a safe corridor for Ukrainian grain deliveries.
On May 30, President Putin made clear in a telephone conversation with his Turkish counterpart Recep Tayyip Erdogan that Russia was ready to export fertilizers and food provided that sanctions on Moscow were lifted.
On July 13, military delegations from Russia, Ukraine and Turkey, plus representatives from the UN, met for the first time in Istanbul, Turkey to try to settle the grain issue. Media were not allowed to attend.
Prior to the talks, Turkish and UN officials held separate meetings with Russian and Ukrainian representatives.
Success
On July 22, 2022, representatives from Russia, Ukraine, Turkey and the UN met in Istanbul and signed the 'grain deal', also known as the Black Sea Grain Initiative. It's seldom dwelt on, but the deal is actually a package agreement comprised of two documents: the 'Memorandum of Understanding between the Russian Federation and the Secretariat of the United Nations on Promoting Russian Food Products and Fertilizers to the World Markets' and the 'Initiative on the Safe Transportation of Grain and Foodstuffs from Ukrainian Ports'.
As its name suggests, the first document provided for the lifting of restrictions on Russian food and fertilizer exports, including the elimination restrictions and obstacles set up by the US and the European Union. The UN Secretariat was required to take steps “to help remove obstacles that may arise in finance, insurance or logistics,” and to strive “to achieve specific exemptions for food and fertilisers…produced in the Russian Federation, from measures taken with regard to the Russian Federation in accordance with the principle that these measures do not apply to food and fertilizers, thereby facilitating unfettered exports of Russian food and fertilizers.”
The document noted that the memorandum “shall remain valid for three years," and that "the Russian Federation and the Secretariat will notify each other in writing three months prior to the date on which they intend to terminate this Memorandum.”
The parties to the second document included Russia, Ukraine and Turkey, with the UN playing an auxiliary role. The goal, again as the name implies, was to facilitate safe navigation for the export of grain, food and fertilizers, including ammonia, from the ports of Odessa, Chernomorsk and Yuzhny. The document spelled out in detail the procedures for the passage of ships through the humanitarian corridor and their inspection, monitoring, modalities of de-mining and the prevention of dangerous incidents with the help of the forces of the Joint Coordination Centre in Istanbul, in which representatives of Russia, Ukraine and Turkiye, plus UN employees would be present.
The first vessel with Ukrainian grain onboard was the Razoni bulk carrier, traveling under the flag of Sierra Leone. The ship left the port of Odessa on August 1, 2022.
In the fall, the Russian Foreign Ministry estimated that as of late October, about 70 vessels were detained or removed from operation during the implementation of the Ukrainian part of the grain deal due to systematic violations and attempted smuggling.
First Signs of Trouble
Russia first began to express concerns with the implementation of the grain deal in August 2022. Commitments to lift sanctions on Russian vessels engaged in grain and fertilizer exports were not kept. Problems with insurance and servicing of ships in ports were not addressed. Banks did not issue loans to purchasers of Russian grain and denied bank guarantees, often citing the danger of Western sanctions. Kiev refused to lift its blockade on a massive Russian pipeline shipping ammonia for fertilizers through Ukrainian territory to Odessa.
President Putin expressed dissatisfaction with the implementation of grain deal at the Eastern Economic Forum in September 2022:
“As I said in my speech, we promised to do everything we could to serve the interests of developing countries – specifically, by ensuring supplies to their markets, including supplies of Ukrainian grain. When we discussed this, that was the understanding <…> What we see is more audacious deceit. And [the West] did not deceive us: they deceived the international community, their partners in Africa and other countries that desperately needed food,” Putin said, characterizing this Western conduct as nothing short of “a con job.”
The deal was also criticized by presidential Aide Yuri Ushakov, Foreign Minister Sergey Lavrov, and other Russian officials and politicians.
On October 14, 2022, several days after the terror attack on the Crimean Bridge, President Putin warned that Moscow might refuse to renew the grain agreements if it transpired that the explosives used for the terror act had been smuggled aboard a grain carrier from Odessa.
Speaking at the plenary session of the Valdai International Discussion Club on October 27, 2022, Putin poured more criticism on the deal, this time denouncing the situation with Russian fertilizers:
“How can a decision be made to lift restrictions and bans on Russian fertilizers in Europe and a follow-up clarification be issued that these restrictions are lifted for EU nations only?” Putin asked, pointing out that this decision effectively restricted supplies to the poorest countries.
On October 29, 2022, Ukraine launched a terrorist attack on the Black Sea Fleet ships and civilian vessels on the inner and outer harbors of the Sevastopol Base in Crimea, prompting Russia to suspend its participation in the grain deal. On November 2, Moscow resumed its participation after Kiev provided guarantees that the Black Sea grain corridor and Ukrainian ports would not be used to conduct any more hostilities against Russia.
The grain deal was set to expire on November 18, 2022, with participants deciding to renew the mechanism for another 120 days, until March 18, 2023. Despite agreeing to the renewal, Russian officials continued to point to issues with the agreements' implementation, specifically as relates to restrictions on Russian food and fertilizer exports.
On March 2, 2023, the Russian Foreign Ministry issued a statement entitled “On the Istanbul Food and Fertiliser Accords,” where it indicated that only a portion of the package deal concerning Ukrainian food exports has been implemented since the documents were signed eight months prior. Moscow noted that the bulk of Ukrainian grain exports went to high income countries (47 percent), primarily the EU, and above-average income countries (34 percent). At the same time, supplies to countries needing the grain the most were steadily decreasing and amounted to just 2.6 percent of the total.
The Foreign Ministry further noted that Kiev continued to block the deliveries of ammonia via the Togliatti-Odessa pipeline for purely political reasons, while progress in implementing the memorandum on Russian food and fertilizer exports had “tapered down almost to zero.” Western countries continued to impose crushing sanctions on Russian exports.
Moscow Puts Its Foot Down
On March 13, Russian Deputy Foreign Minister Sergei Vershinin held consultations regarding the extension of the grain deal in Switzerland with UN Under-Secretary-General for Humanitarian Affairs Martin Griffiths and UN Conference on Trade and Development Secretary-General Rebeca Grynspan. Following the talks, Vershinin said Russia had no objection to renewing the Black Sea Initiative again after the second renewal expired on March 18, but only for 60 days.
On March 14, Deputy Foreign Minister Alexander Grushko confirmed the grain deal’s renewal for another 60 days. The Kremlin characterized the grain deal’s extension as a “goodwill gesture.”
Kiev rushed to deny that the deal had been renewed for only 60 days, with Ukrainian Infrastructure Minister Alexander Kubrakov saying this was at odds with the agreement and claiming that the agreement was actually renewed for 120 days.
In addition, the senior Russian diplomat pointed out that 60 days would be enough to make progress, not in words but in practice, toward implementing the provisions of the memorandum signed by Russia and the UN.
In April, Foreign Minister Lavrov alleged that the Russian part of the deal was “not being carried out at all.”
“The Russian component of this package, provided for by a special memorandum between the UN and our country, is not being carried out at all. Both our Turkish friends and the initiator of this entire package, Mr. Antonio Guterres, the UN Secretary-General, are directing appeals and demands to Western countries, but in vain,” Lavrov said in a briefing in Ankara along his Turkish counterpart, Mevlut Cavusoglu.
Cavusoglu also spoke about the importance of removing obstacles to Russian fertilizer exports.
“We discussed the implementation of the grain deal,” Cavusoglu said. “Further implementation of the agreement is important not only for ensuring grain and fertilizer supplies from Russia and Ukraine, but also to mitigate the fallout of the global food crisis.”
Russian Deputy Permanent Representative to the UN Dmitry Polyanskiy also spoke in April about Moscow’s dissatisfaction with the implementation of the Russia-related component of the deal. He put the odds of its further extension at 50-50.
“The odds of extending the grain deal are 50-50: it will either be extended or it won't be. We are absolutely dissatisfied with the way the second part of the package agreement is being implemented. The first one – on Ukrainian grain exports – is clear and attention is focused on it. Meanwhile the part that concerns exports of Russian agricultural products and fertilizers remains in the background. As a rule, it all ends with the presentation by the UN Secretary-General and his team. They are showing [us] a pile of letters and describing how much they’ve done, how many calls and visits they’ve made,” Polyansky said in an interview with Russian media.
UN officials also spoke about the need to ensure the full implementation of the package agreements. Asked in March whether the UN could make progress on issues raised by Russia, Farhan Haq, Guterres deputy spokesman, mentioned the need to see what progress could be achieved on a range of issues.
In May, commenting on the implementation of the grain deal, Kremlin spokesman Dmitry Peskov said grounds for optimism were “very modest.” Peskov noted that Russia was interested in adhering to the grain deal’s terms, but stressed that it would not do anything against its own interests.
Along with the failure to implement the Russian component of the grain agreement, Moscow's dissatisfaction has also been tied to the Ukrainian military's actions. In March and April, Russia's military reported that Kiev had attacked deployment sites of the Black Sea Fleet in Sevastopol, as well as Crimea’s civilian infrastructure, in violation of the guarantees that the Black Sea humanitarian corridor would not be used for hostilities.
The Russian Foreign Ministry noted that the further extension of the Black Sea Grain Initiative beyond May 18 would be out of the question without progress on resolving five “systemic” problems:
1.
re-connecting Russia's Rosselkhozbank to SWIFT2.
resuming the supply of agricultural equipment and spare parts, and providing service maintenance3.
eliminating restrictions on insurance and re-insurance and lifting bans on port access4.
resuming the Togliatti-Odessa ammonia pipeline’s operation5.
unblocking foreign assets and deposits of Russian companies linked with the transportation of food and fertilisersOn May 5, Turkey hosted a meeting of technical delegations on the grain deal in Istanbul. The Turkish Defense Ministry reported that participants discussed the agenda of an upcoming meeting of deputy defence ministers from Russia, Turkey and Ukraine.
A Sputnik source in Turkey reported at the time that the agenda of the “technical meeting” also included the issue of guarantees of Rosselkhozbank’s return to the SWIFT system. The UN and a number of Western countries were said to have discussed this issue in detail.
On May 10 and 11, Istanbul formally hosted talks of the delegations from Russia, Ukraine, Turkey and the UN on the grain deal’s extension.
On May 17, President Erdogan announced that the grain deal would be extended for another two months and that Turkey would do everything in its power to ensure the full implementation of the agreements.
On June 7, Russia's Defense Ministry announced that a Ukrainian sabotage group had blown up a section of the Togliatti-Odessa ammonia pipeline in Kharkov Region. The press service of Transammiak, the operator of the pipeline on the Russian side, reported that the Russian section of the piece of infrastructure had been disconnected from the Ukrainian section, that it remained in good working order and was under constant monitoring.
Dmitry Peksov said the destruction of a section of the Togliatti-Odessa ammonia pipeline substantially complicated the possibility of extending the grain deal.
Following talks with the UN in Geneva, Deputy Foreign Minister Vershinin said the opportunities for restoring the Togliatti-Odessa ammonia pipeline and ammonia exports from Togliatti to Ukrainian ports had been suspended for a long time after Kiev's terrorist act. He added that the incident had dealt a blow at the UN secretary-general’s ideas and initiatives for getting the pipeline up and running.
On June 10, Vershinin stated that a decision on whether to extend the grain agreement or not would be based solely on Russia’s interests.
“Despite the declarative statements regularly made in the Western capitals of Washington, London, and Brussels, the barriers standing in the way of our [agricultural and fertilizer] exports have remained in place. Issues related to transactions, spare parts, insurance and reinsurance of Russian cargoes on Russian ships when they make ports of call at European ports have remained unresolved. In fact, we can state that the part of the so-called package that forms the Istanbul agreements of July 2022 is not being carried out. We cannot and will not compromise our interests.”
On June 13, President Putin said at a meeting with war correspondents that Russia was thinking about withdrawing from the grain deal, especially as the corridor was being used by Ukraine for drone attacks. Speaking about the agreement in general, and about why Russia had extended it so many times despite the continued failure by the West to meet Moscow's interests under the deal, Putin said Russia was not doing it for Ukraine, but for friendly countries in Africa and Latin America.
Raw Numbers
As of July 10, 2023, total grain and food exports under the Black Sea Grain Initiative amounted to some 32.8 million tons.
At 16.8 million tons, corn accounted for almost half of the grain shipped, while wheat accounted for 8.9 million tons from the total. Sunflower meal shipments reached 1.9 million tons, sunflower oil 1.7 million tons, barley 1.3 million tons, rapeseed 985,600 tons, and soybeans 802,200 tons.
According to UN statistics, five countries received more than half of all exports: China (8 million tons), Spain (6 million tons), Turkiye (3.2 million tons), Italy (2.1 million tons) and the Netherlands (1.9 million tons).
In early July, the Russian Foreign Ministry noted that over 80 percent of the grain went to the countries with high and above average incomes, while the poorest economies (Ethiopia, Yemen, Afghanistan, Sudan and Somalia) received only 862,086 tons, or 2.6 percent of all shipments. On average, only two World Food Program vessels participated in the Black Sea Initiative each month throughout the year that the deal had been in effect, compared with 90 commercial grain carriers.
Earlier, in the spring, Moscow indicated that despite the fact that global food prices had fallen by 18.6 percent since March 2022, wheat prices remained high and many consumers couldn’t afford them. One of the reasons Moscow cited was the fact that 70 percent of Ukrainian exports included feed corn and fodder crops. According to the Foreign Ministry, the normalization of Russian supplies of grain (70 percent wheat), as well as fertilizers, which guarantee the next year's harvest, would help overcome crushing prices. However, Moscow's efforts to make fertilizers available to the poorest economies continued to face numerous obstacles, connected to failures to fully implement the grain deal.
In late May, Foreign Minister Lavrov said that after Russia launched its military operation in Ukraine, about 300,000 tons of fertilisers were seized at EU ports, with Moscow pledging to donate these fertilizers to developing countries. However, since September 2022, thanks to the "colonial practices" of the Europeans, only two batches of these seized fertilizers had been shipped to date - 20,000 tons to Malawi and 34,000 tons to Kenya. Russia plans to deliver another 34,000 tons of fertilizer to Nigeria in the near future if Western countries don't put up any more artificial roadblocks.
Deal's Fate is Sealed
On July 4, the Russian Foreign Ministry issued a statement saying that there were no grounds for renewing the Black Sea grain deal after its expiration on July 17, adding that “the Russian side" would make all "necessary efforts in strict accordance with the rules of procedure to ensure that all participating vessels are able to successfully complete their mission and leave the Black Sea before the expiration date.”
In an interview with Russian television last week, President Putin said that "nothing" had been done to take Russian interests related to the grain deal regarding logistics, insurance, payment systems, etc into account. "It's been a one-sided relationship," he said. "Despite this, we voluntarily extended this so-called deal many times. Many times. But listen, enough is enough."
And now you know the rest of the story.
