The Black Sea Grain Initiative: Russia’s New Instrument of Blackmail

March 27, 2023
On March 18, the Black Sea Grain Initiative was extended for an indefinite period. Russia is using it to demand concessions on Western sanctions.
Photo credit: Wikipedia

Signed in July 2022, the Initiative has allowed Ukraine to export agricultural products from three ports in Odesa Oblast.

According to Ukraine's Ministry of Infrastructure, Ukraine has exported almost 24,5 million tonnes of agricultural products through the Initiative, including almost half a million tonnes to the world's poorest countries in partnership with the World Food Programme.

In November, the deal was extended for another 120 days, as provided for in the document. However, this time Russia decided to use it as a tool to blackmail the world for concessions on Western sanctions.

Russia undermines the deal

Back in October, the Russians started sabotaging the deal. They reduced the number of inspection teams and their working periods, resulting in queues of 120-140 Ukrainian ships waiting to be inspected before passing the Bosphorus.

According to Ukraine's Deputy Minister of Infrastructure Yurii Vaskov, since October, the of the Initiative has only  been able to let through a third of available export capacity.

Russian presidential spokesman Dmitry Peskov said on March 9 that "there are still many questions with the final recipients and questions about where most of the grain ultimately goes."

According to the UN data of September 2022, during the first two months of the Initiative, around 25% of the cargo went to low and lower-middle income countries, such as Egypt, India, Iran, Bangladesh, Kenya, Sudan, Lebanon, Yemen, Somalia, Djibouti, and Tunisia. Some 25% of grain went to upper-middle income countries, with the remaining 50% or so going to high-income countries. However, the UN pointed out that all of the grain coming out of the Ukrainian ports benefited people in need, as it helped to stabilize markets and limit food price inflation.

Countries which have received Ukrainian agricultural products via Black Sea Grain Initiative. Source: United Nations

Ukraine turned to Türkiye and the UN to start negotiations on amending the Initiative agreement to allow its extension for a full year and to broaden it to include the Port of Mykolaiv to the list. Deputy Infrastructure Minister Vaskov explained that a bigger duration of the deal would allow for more predictability on the market. As the time to extend the deal approached, Russia announced that it would only agree to do so for 60 days.

Russian Deputy Foreign Minister Sergey Vershinin stated that the country would base any further cooperation on "the real - not in words, but in deeds - progress in the normalization of Russian agricultural exports, including bank payments, transport logistics, insurance, unfreezing of financial activities, and the supply of ammonia through the Tolyatti-Odesa pipeline."

Dmitry Peskov said Russia had made a "gesture of goodwill" by agreeing to extend the deal even for 60 days. He added that Russia appreciates the efforts made by the UN in general and personally by its Secretary General Antonio Guterres, but these efforts could not break through the "dead wall of the collective West."

Deputy Head of the State Duma Committee on Property, Land, and Property Relations Vladimir Samokish stated that "this position should open the Western establishment's eyes to the real state of affairs." He blamed the West for disrupting the grain deal and putting at risk the poorest countries in the world (which he called "disregarded by the West"), as well as their own countries.

  Sergey Vershinin

Ukrainian Minister of Infrastructure Oleksandr Kubrakov responded that Russia's declaration violates the document signed in Istanbul. Concerning the transporting of ammonia, Ukraine agreed to relaunch the Tolyatti-Odesa pipeline, but only after exchanging all POWs with Russia in an "all for all" swap.

Ukrainian financial news outlet Ekonomichna Pravda wrote that with the demand to re-open the  ammonia pipeline, Russia is trying to strengthen its geopolitical position more than it is trying to regain an income stream because its earnings from ammonia would pale in comparison to oil and gas sales. In this case, destinations matter, as the ammonia was previously exported to China, Brazil, India and other states with whom Russia maintains quite close relations.

According to experts surveyed by Ekonomichna Pravda, the 60-day corridor would have a detrimental influence on grain markets. They explained that if ships are waiting for 30-40 days in queues in Istanbul, it means that the delivery contracts for the grain they are carrying were signed at least 60 days previously.

  • This means that exporters wouldn't be able to plan their logistics and purchasers would refuse to buy Ukrainian grain due to the risks. The only beneficiary would be Russia, who would be in position to insert itself into Ukraine's market share. That is why the European Business Association, the American Chamber of Commerce in Ukraine, and the Ukrainian Agribusiness Club, called on the UN and Türkiye to extend and expand the deal and ensure free commercial navigation in the Black Sea region. As the statement explains, unlike ships visiting Ukrainian ports, the movement of Russian vessels in the Black Sea is not limited by regular inspections.

Finally, the deal was commented on by Vladimir Putin himself during the Russia and Africa In A Multipolar World conference. According to the Russian President, the Black Sea Grain Initiative benefits mostly wealthy states, while Africa has received only 3% of the supplies.

This statement was immediately debunked by Ukrainian Foreign Ministry spokesman Oleg Nikolenko, who responded that African states received 11,6% of the agricultural exports sent through the Initiative.

In addition, he noted, European countries have been re-exporting part of the grain they receive from Ukraine to Africa as humanitarian aid, making Africa's share even higher. Moreover, almost 50% of the exports have gone to Asia. However, Putin mentioned the possibility of withdrawing from the deal and "generously" replacing the Ukrainian grain that had been sent to African countries with Russian grain free of charge.

Legal technicalities and EU sanctions

It is worth explaining that the July 2022 grain deal comprised two separate agreements signed in Istanbul: one was a memorandum of understanding between the UN and Russia to facilitate Russia's exports of food and fertilizers, while the second  was the Black Sea Grain Initiative to allow the export of grain, fertilizers and other foodstuffs from Ukrainian ports.

The Black Sea Grain Initiative was not an agreement which Ukraine and Russia signed with each other -- rather, each of them signed a separate agreement with the UN and Türkiye which together formed the deal.

The EU insists that these two documents be treated separately. The EU also maintains that its sanctions on Russia do not prohibit the import, export, purchase, or trade of food and fertilizers from Russia, with the exception of potash and related products.

Moreover, transactions are allowed even if they involve sanctioned entities. At the same time, non-EU countries can import any products from Russia if they do so entirely outside the EU or without the involvement of an EU operator. Thus, Russia is using this opportunity to pressure the EU to ease its sanctions in other sectors (such as banking and transport) despite the fact that Russian exports have largely remained stable compared to previous years across all types of fertilizers, as the EU Delegation to Russia explains.

The Initiative's uncertain future

On March 18, Ukraine's Minister of Infrastructure announced that the deal had been extended for another 120 days. Russian Foreign Ministry spokeswoman Maria Zakharova reiterated that Russia had only agreed to a 60-day extension. The UN welcomed the extension of the deal without specifying its length. Thus, the question of how long the deal remains valid remains open.

Summing up, Russia again is using food as a pressure lever. It created huge global food security problems by invading Ukraine, and now has the audacity to demand concessions from the West, blaming its adversaries for starving other countries. Russia is taking every opportunity to ease its own economic pain and bargain for more benefits for itself, no matter how brazen or cynical its means.

Andriy Avramenko
Analyst and Journalist at UkraineWorld