What is the Black Sea grain deal that is at risk of falling apart?

Russia and Ukraine are among the world's top grain exporters, and their conflict sent food prices surging around the world

The world watches with bated breath as a landmark agricultural deal brokered between Ukraine, and Russia is set to expire today (July 17), with Moscow refusing to renew the agreement.

The Black Sea Grain Initiative is a deal brokered by the United Nations (UN) and Turkey between Russia and Ukraine on July 22, 2022, to assure food shipments through the Black Sea, which was stranded following Russia's invasion of Ukraine.

In a bid to keep the deal, UN Secretary-General Antonio Guterres issued a letter to Russian President Vladimir Putin proposing measures to preserve it. On Friday, UN spokesperson Stephane Dujarric told reporters that conversations with the Kremlin via Signal and WhatsApp would continue over the weekend.

 

What is the Black Sea Grain Initiative?

In August 2022, months after the Russia-Ukraine war began, both sides signed separate deals to reopen three of Ukraine's Black Sea ports: Chornomorsk, Odesa, and Yuzhny/Pivdennyi.

Both Moscow and Kyiv are key global suppliers of wheat, barley, sunflower oil, and other affordable food goods to Africa, the Middle East, and parts of Asia. Ukraine is also a major supplier of corn and Russia of fertiliser, both of which are key components of the food chain. Interrupted shipments from Ukraine exacerbated a global food crisis and sent grain prices skyrocketing globally.

What has the deal accomplished so far?

Before Russian troops swept over Ukraine's borders in late February 2022, Kyiv and Moscow accounted for about a quarter of world grain exports. However, Ukraine's 20 million tonnes of grain were trapped once the war began, leading to a rise in global food prices. It jeopardised food supplies in a number of West Asian and African countries that rely largely on Ukrainian grain.

The UN had then warned that 44 million people in 38 countries were facing "emergency levels of hunger." However, after the agreement was reached, worldwide prices for key staples such as wheat fell, restoring some sense of food security.

According to the UN's Joint Coordination Centre, which oversees the scheme, 32 million tonnes of food and fertiliser have been sent from Ukraine since its inception. 

Furthermore, the deal made the World Food Program (WFP) its number two supplier, and 725,167 tonnes of wheat have already gone on World Food Program ships to some of the world's most food-insecure nations, including Afghanistan, Ethiopia, Somalia, Sudan, and Yemen.

Why is Russia threatening to pull out now?

According to a BBC report, the deal is meant to be extended for 120 days at a time, but in March and May 2023, Russia agreed to extensions of only 60 days. And now, Russia is threatening to pull out completely.

Russia alleges that the deal is not favourable to them, as commitments made to remove obstacles to Russian food and fertiliser exports have not been fulfilled. It further argues that it sees no grounds to extend the deal.

Earlier in April, Russia's foreign minister, Sergey Lavrov, had warned that if the Black Sea Grain Initiative did not integrate fertiliser goods soon, Moscow would not extend the deal.

On Thursday, Russia's strongman Vladimir Putin said that Moscow wouldn't extend the grain deal unless the West fulfilled "the promises given to us." 

"We have repeatedly shown goodwill to extend this deal," Putin said, adding, "Enough is enough."

Apart from fertiliser exports, Moscow also wants the Russian Agricultural Bank, or Rosselkhozbank, to rejoin the SWIFT banking system. Russia has been excluded from the world banking system since the beginning of the war in Ukraine.

There is also a demand for agricultural machines and parts to be restarted. Russia also wants the Togliatti-Odesa ammonia pipeline reopened, as well as the accounts of Russian companies involved in food and fertiliser exports.

What if the deal is not extended?

The grain deal is critical for global food security. The International Rescue Committee even refers to it as a "lifeline for 79 countries and 349 million people."

If the deal is terminated, the prices of some staples will rise, forcing people further into poverty and starvation. 

Additionally, countries would need to find suppliers outside the Black Sea region, further raising the cost of staples. This would negatively impact countries, and debt levels would grow exponentially.

The deal's collapse would also have ramifications for Ukraine, whose economy is heavily reliant on food exports.

(With agency inputs)