The Black Sea Grain Initiative (also known as the “grain deal”) was signed in July 2022 between Russia, Ukraine, Turkey and the UN. It presupposed the organization of a safe maritime corridor for the export of Ukrainian cereals and foodstuffs via the ports of the Black Sea. At the same time, the Russian side regularly complains about Ukraine’s non-compliance with the terms of the agreement and sets new conditions for its extension – for example, the launch of the Togliatti-Odessa ammonia pipeline stopped. Alexandra Prokopenko, an expert at the Carnegie Endowment for International Peace, told Russian media what Russia wants to achieve through the “grain deal”.
Why Russia complains about the conditions of the Black Sea Initiative, but at the same time constantly prolongs it
Apparently there is both “the latest Chinese warning” and “the latest Russian extension”. From what we see now, Russia no longer has much leverage to influence its partners in the grain deal, when it is quite beneficial to them. Therefore, Russia, of course, expresses its displeasure that its conditions are not fulfilled or are not fulfilled in the form it would like.
When we talk about a grain agreement, we have to understand that two documents were signed. One of them is a memorandum, which has no legal value. It’s just a kind of paper setting out the intentions of both parties. In the future, some legally binding agreements are usually signed behind. In the case of the grain agreement, no such contract has been signed. And the second document was signed “for all that is good” in terms of Russian exports “against all that is bad”, that is, against the fight against Russian exports. And now we see from the statistics that Russian grain exports are continuing.
Harvesting wheat in the Orenburg region in 2022Alexander Manzyuk / Kommersant
Judging by what we see, Russia has received a record grain harvest and is exporting it to different markets. Perhaps it does it with less comfort than before 2022. But Russia after the well-known events, in principle, is not very comfortable.
Everything related to the export of fertilizers is not the responsibility of national governments, but of companies. And if companies do not want to transport Russian fertilizers, provide ships for their transport or insure Russian freight, this is the responsibility of legal persons, not national governments.
Therefore, Russia most likely expresses its displeasure precisely because it seemed able to pressure other governments to put pressure on the companies, and to get them to take over ez yuzhual business. But in the world things are done a little differently.
Why is it important for Russia to restore the operation of the ammonia pipeline through the territory of Ukraine
I find it difficult to say how important the Black Sea Initiative is for Russia, because it constantly juggles them. Today one is important, tomorrow the other is important. To be honest, I doubt an ammonia pipeline would be such a critical requirement for Russia. It is unlikely that the Russian budget will suffer or that the interests of individual Russian companies will be affected in any way. Moreover, Uralchem is already dreaming of the port of Taman.
Therefore, it doesn’t seem to me like it’s some sort of central, main plot. It looks more like lobbying for the interests of individual businessmen.
I don’t quite understand what Russia’s interests are if we are talking about resuming operation of the ammonia pipeline. It may provide some export earnings, but it is incomparable with other Russian export sectors. Moreover, since the pipeline crosses the territory of Ukraine, which is regularly bombarded, the risk of damage is high. And this threatens a serious environmental disaster.
The territory of Odessa Port Plant OJSC in 2017Arkhip Vereshchagin / TASS
As for the delivery of ammonia, the former owners of Togliattiazot, who had problems gaining access to the ammonia pipeline, because ammonia from Rotenberg flowed through the pipe, chartered tank trucks and special wagons for its transportation.
In the case of Ukraine, as far as I know from the media, the government of that country sets as a condition for the lifting of the blockage of the ammonia pipeline the exchange of all prisoners on the one hand for all the prisoners on the other hand. Russia, obviously, is not ready to meet this political demand. By the way, Dmitry Mazepin, co-owner of Uralchem, spoke about this during a meeting with Putin in November 2022, transcription which is available on the Kremlin website. So here the questions relate only to Russia itself.
Does an agreement exist in principle if there are no fundamental documents about it
It seems to me that there is an agreement in one form or another. Otherwise, the parties would not return to the negotiating table. However, Russia’s role in it has significantly diminished, and from “triumphant” in this matter it has simply been reduced to a technical partner. Because the need for Russia in partners such as China and Turkey is much greater than the need for China and Turkey in a partner such as Russia.
At the same time, as far as I know, there are still documents that regulate issues of control of grain carriers and regulate the work of the Black Sea Initiative Committee. Maybe they exist as part of the UN or in a separate form – I don’t know.
But in general, there are agreements from all countries participating in the Black Sea Initiative. Some of them are on paper, some are not. As far as I know, the agreements that accompanied the agreement provided that Russian companies would benefit from exemptions from the sanctions regime in terms of agricultural exports and fertilizer exports. That is to say that everything relating to issues of ensuring food security has been done.
Another problem is that Russia is making new demands.
For example, he wants Rosselkhozbank to be reconnected to the SWIFT banking messaging system. This requirement only appeared in the fall, when Rosselkhozbank never played a significant role in obtaining export contracts. From my point of view, this is an attempt to protect him from the alleged sanctions by analogy with Gazprombank.
Vladimir Smirnov / TASS
At the same time, payments can be made through Gazprombank, through any other bank not disconnected from SWIFT. Moreover, if you read carefully the European exemptions from the sanctions regime, transactions in terms of agricultural exports are also authorized for certain other banks. For example, for Promsvyazbank, for Rossiya Bank, for VTB, for VEB.
And SWIFT isn’t the only way to deliver banking messages. I sometimes get the impression that when they talk about this system, they think it works like a pneumatic courier, where you put money in a bottle and send it.
But in fact it is only an interbank messaging system. Yes, it is the most understandable and fastest standard suitable for the global banking industry. But you can notify the payment by other means.
Who is the beneficiary of the grain deal
First of all, of course, Ukraine, which had the opportunity to export grain through the Black Sea ports. This is advantageous for Turkey, as it receives grain under a grain agreement, and Turkish companies are actively involved in its processing. And then it is already sold in the form of finished products. China is also an active recipient of grain under this agreement. Russia is also the beneficiary in the form in which it exists.
Andrew Kravchenko/AP
It’s just that, for some reason, a Russian narrative has developed that the West is not honoring its agreements under the deal. But then these agreements must be presented in one way or another, and not as Russia does. If they are written, they must be presented. But the documents signed by Russia have not been published.
Are there other ways of transporting the grain than exporting by sea
If we are talking about such large volumes of grain being shipped by sea, there is no alternative. It is a traditional way of transshipping and transporting agricultural products.
But here I would pay attention to the statistics on the Danube ports. It has increased significantly in 2022. Clearly this has come from a low base in previous years, but Ukraine sends almost a third of the grain through them. It can also be an alternative. Also, do not forget about rail transport.
What leverage did Russia have to pressure other parties interested in the deal?
Russia has already said twice that it will not renew the agreement with Ukraine. And yet, the agreement continues to exist. All parties believe that the agreement continues to work.
I don’t think anything will change in July. Russia no longer has many levers to try to end its existence. It could, of course, finally part ways with China and Turkey as partners, but I don’t think that will happen.
It seems to me that if Russia is simply squeezed out of the deal, then she will be left with the only option – blocking the ships by military means. And it will look, frankly, like that. I don’t think Russia will behave like this.
Therefore, it is also totally unprofitable for Russia to stop the deal. After all, it was apparently originally designed as some kind of leverage to put pressure on Ukraine and the West. And it turned out that either the lever is too tight, or it just doesn’t work.
The opinion of the author may not coincide with the opinion of the editors
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