Kremlin announces termination of grain deal

The grain deal, under which Ukrainian ports had been open for food exports since last summer, has been terminated, Kremlin spokesman Dmitry Peskov said on Monday.

“In fact, the Black Sea arrangements have terminated today. As the president of the Russian Federation said earlier – the deadline of July 17 expires. Unfortunately, the part concerning Russia of these Black Sea agreements has not been implemented so far, so it is being terminated”, Peskov said at a briefing (he was quoted by Interfax).

Russia has officially notified Ankara, Kyiv and the UN of its objection to the extension of the agreement, Russian Foreign Ministry spokeswoman Maria Zakharova said. A Western diplomat confirmed to the Financial Times that the parties to the deal received the notification from Moscow on Monday morning.

The Russian Foreign Ministry said in an official statement that the coordination center in Istanbul, which issued permits for the passage of grain carriers, will be disbanded from July 18. Moscow also withdraws guarantees of safety of navigation for the humanitarian corridor and reintroduces the regime of temporarily dangerous area in the northwest of the Black Sea.

The agreement on the export of Ukrainian grain was concluded in Istanbul in July 2022. Under the UN-brokered agreements signed by representatives of Moscow, Kyiv and Ankara, Russia agreed not to hinder the export of Ukrainian food, which resulted in 33m tons of grain reaching the world markets.

At the same time, Russia signed a “memorandum of understanding” with the UN, which undertook to facilitate the removal of barriers to Russian fertilizer and food exports. However, this document had no legal force, and its text emphasized that it did not impose any obligations on the parties involved.

Russia insisted that both documents were “package” – that is, linked to each other – and accused the West of failing to fulfill the terms of the agreement. In order to prolong the agreement, the EU offered to reconnect Rosselkhozbank to SWIFT through a specially created subsidiary. But a letter from UN Secretary General António Guterres to President Vladimir Putin proved powerless to influence the Kremlin’s position.

In reality, the Russian demands are impossible to fulfill: neither the UN, nor Turkey, nor Ukraine are able to influence the entry of ships with our cargoes to other countries, points out Vladimir Petrichenko, general director of ProZerno. “We have problems with insurance and freight. There is no fleet controlled by Russian sellers yet”, he explains.

Nevertheless, Russia has no choice, and the most likely scenario is to return to the grain deal after some time, says Nikolay Lychov, editor-in-chief of Agrotrend portal: “There are parallel imports and alternative investments through Turkey, and Russia needs them. We don’t have a strong negotiating position here to just walk out”.

Negotiations on the future of the grain deal continue, but the probability of their success is minimal, a source in Ankara familiar with the situation told TASS.

99% that it will be finalized, the source explained, adding that there is a 1% chance that the agreement will be saved at the last moment by personal talks between Putin and Turkish President Recep Erdogan.

According to the TASS source, Moscow needs “concrete agreements on the export of Russian products,” while the claims against the deal are related to the fact that Ukraine “has received significant revenues through grain exports, which it has invested in the defense sector”.

Denis Marchuk, deputy head of the All-Ukrainian Agrarian Council believes that Ukraine will have the opportunity to continue exporting by sea without Russia’s involvement. “We already had such an experience in November 2022”, he told Reuters. At that time, Russia refused to extend the first agreement, which lasted four months, but Erdogan said supplies would still continue. Russia soon rejoined the agreement. “If there are security guarantees from our partners, why not implement the grain initiative without Russia’s participation?”.


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