August 3, 2023: What is the Black Sea Grain Deal? Why did Russia back out of it? What could this mean for Russia, Ukraine and the rest of the world?
Russia has decided to suspend its participation in the United Nations and the Black Sea grain deal.
This agreement allowed Ukraine to safely export grain, oil, and fertiliser through its Black Sea ports. The Kremlin spokesperson, Dmitry Peskov, stated that Russia will only rejoin the initiative if its demands are met. These requests include the relaxing of marine transportation insurance regulations that have affected exports as well as the lifting of western sanctions against Russian fertiliser businesses.The United Nations and Turkey-mediated Black Sea grain deal has been suspended by Russia. As a result, the Black Sea agreements are no longer in effect for Russia.
Kremlin- used to refer to the Russian government
Western sanctions- penalties imposed by western countries on Russia. Additionally, Russia's income from gas and oil has been reduced by Western countries. The EU restricted the import of refined oil and halted importing Russian coal. All imports of Russian gas and oil were outlawed by the US and the UK.
Ukraine is also known as the 'breadbasket of Europe' because It is a major exporter of grains like maize, wheat, and barley, as well as fertilizers. In 2022, Ukraine supplied 70 percent of India's annual sunflower oil imports. Russia and Argentina are the other significant sources for India's sunflower oil, contributing 20 percent and 10 percent, respectively.
Ukraine plays a crucial role in supplying essential food products to both its own population and other countries around the world.
According to Sanjay Kumar Pandey, a professor at Jawaharlal Nehru University, Russia seeks reciprocity in the deal, and they indicated a willingness to rejoin the initiative if their demands are met.
Russia is a major global grain exporter, accounting for 18 percent of total international exports.
This situation has significant implications for Russia, Ukraine, and the global community, and ThePrint provides further insights into the deal and its consequences.
So, What is the Black Sea grain deal?
The Black Sea grain initiative was established in July 2022 with the involvement of Turkey, the UN, and Russia. Its purpose was to enable Ukraine, a major grain producer, to export its grain through the southern ports via the Bosphorus.
Other transportation options like road, rail through Poland, or canal and river through Romania were insufficient for handling the required quantities of grain.
Turkey's participation was due to the close relationship between Turkey’s president Recep Tayyip Erdoğan and Vladimir Putin and Turkey's responsibility for managing shipping in the Bosphorus and Dardanelles straits according to the Montreux convention signed in 1936.
Bosphorus- an important shipping route connecting the Mediterranean to the Black Sea.
Dardanelles- Also an important shipping route and the only seaward entrance to Istanbul, it connects the Black Sea to the Mediterranean Sea.
This was an important political achievement during the ongoing war, enabling commercial exports of food and fertilisers (including ammonia) from three key Ukrainian Black Sea ports: Odesa, Chornomorsk, and Pivdennyi (formerly known as Yuzhny). A separate agreement was also signed to lessen the effect of the restrictions on the export of Russian food and fertilisers.
- Ukraine managed to export 3,300 crore kgs of grain from its ports in 2023 up to July.
- The UK reports that 61% of this grain went to low- and middle-income countries, like India, Nigeria, Pakistan, etc., with 65% being wheat alone.
- The World Food Programme purchased 75 crore kgs of Ukrainian grain and distributed it to countries in need like Afghanistan, Ethiopia, Somalia, and Sudan.
Russia disputes the claim, stating that less than 4% of the grain went to the poorest countries.
The Black Sea grain initiative faced challenges as Russia slowed down inspections and eventually ended the deal. Russia believed that the second part of the deal which allowed for increased Russian agricultural exports, was not being honoured by the West.
They wanted bans on Russian goods exports to be clearly lifted to ensure the safe transport of food on Russian ships.
Who’s to blame for this?
Both sides share blame for the situation.
The West claims Putin didn't value the deal because it benefited Ukraine's economy and farmers. Efforts were made by the UN secretary general to meet Putin's demands. The West acknowledges that grain exports to the least developed countries were not as expected, with significant export drops for wheat, corn, and barley. Most goods were shipped to China and high-income countries.
So, What now?
The situation is tense as Russia's defense ministry indicates that any ship leaving a Ukrainian port may be a military target. Putin's willingness to rejoin the deal seems conditional on meeting his demands, but recent events like the bombing of Odesa port suggest that his actions and flexible behaviour are questionable.
Decreased exports could lead to stockpiles in Ukraine, forcing farmers to reduce sowing in the next season. Russia may raise the export tax on wheat to fund its military campaign in Ukraine, and shortages of fertilisers could worsen as Russia is a major global source of mineral fertilisers, accounting for about 15% of production and exports worldwide.