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UN sources have confirmed Russia’s withdrawal from the Black Sea Grain Initiative with immediate effect, following a long-running dispute over the removal of sanctions affecting Russian fertiliser and food exports. 

Over 1,000 shipments of corn, wheat, sunflower products and other soft commodities have left Ukrainian Black Sea ports since the launch of the initiative in July last year.  

However, Russian negotiators have complained that a separate memorandum of understanding (MoU) signed the same month – which vowed to overcome barriers to the country’s exports of food, fertiliser and other raw materials – has still not been fully implemented. 

Russian press secretary Dmitry Peskov told reporters early on July 17 the country had informed Turkey, Ukraine and the UN of its objections to extending the grain deal, on the grounds that “the Russian part of these Black Sea agreements has not been implemented so far”. 

A UN source has confirmed to GTR that the Joint Coordination Centre in Istanbul received notification from Russia that it is withdrawing from the initiative with immediate effect. 

In March, Russia threatened to withdraw from the agreement unless there was “tangible progress on normalisation of our agricultural exports”, citing sanctions-related issues that were affecting bank payments and insurance cover. 

Ministers singled out ammonia exports via the Tolyatti-Odessa pipeline as an area of concern. 

Though the deal was eventually extended, tensions remained. 

UN spokesperson Stéphane Dujarric said last week that the secretary-general had written to Russian President Vladimir Putin outlining proposals for implementing last year’s MoU. 

Dujarric said the main objective was “to remove hurdles affecting financial transactions through the Russian Agricultural Bank, a major concern expressed by the Russian Federation, and simultaneously allow for the continued flow of Ukrainian grain through the Black Sea”. 

Further statements from the UN and the Russian Ministry of Foreign Affairs are expected today. 

Martin Devenish, board director and head of corporate intelligence at S-RM, says the end of the deal “is no real surprise”. 

“Russia has been threatening to walk away for months, with Putin stating on Russian television as recently as last Thursday that ‘enough is enough’,” he says.  

“Questions will be asked about how much of this Russian posturing was simply brinksmanship and whether the UN could have offered any further concessions on fertiliser and food exports to bring Moscow back to the table.” 

UN data shows that nearly 33 million tonnes of cargo had been shipped from Ukraine under the initiative, with China, Spain and Turkey the three largest importers of goods. 24 of the 1,004 shipments were backed by the UN’s World Food Programme. 

 

Update (July 17, 2023)

In a statement issued in the afternoon of July 17, Russia’s foreign ministry says it would only consider restoring the agreement if western governments “seriously think about fulfilling their obligations and actually withdraw Russian fertilisers and food from sanctions”. 

It says payments, insurance and logistics issues remain unresolved, and the Russian Agricultural Bank has not been reconnected to the Swift payment messaging system, one of Moscow’s key demands. UN proposals last week to establish a subsidiary with Swift access were “feverish…, unrealisable and unviable”, it adds. 

The statement adds that despite the humanitarian goals of the initiative, more than two-thirds of exports were to countries with high and upper-middle income levels rather than those at serious risk of food shortages.  

In response to Russia’s withdrawal, the UN says it “deeply regret[s] the decision” and that the deal has helped reduce food prices by nearly a quarter since March 2022. 

“Hundreds of millions of people face hunger and consumers are confronting a global cost of living crisis. They will pay the price,” says UN secretary-general António Guterres. “Indeed, we are already seeing a jump in wheat prices this morning.” 

Guterres also defends the UN’s proposals on unblocking Russian fertiliser and agricultural exports, noting that the Russian Agricultural Bank has access to “a bespoke payments mechanism… through JP Morgan outside of Swift”.