Saturday, March 25, 2023

Kyiv hopes for Russia’s swift return to Black Sea grain deal

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Kyiv hopes Russia will within days resume its participation in an agreement that allowed shipments of Ukrainian grain through the Black Sea to help alleviate a global food crisis.

Talks between the UN, Turkey and Russia on Moscow’s return to the so-called Black Sea grain initiative are continuing following Moscow’s withdrawal from the deal last Saturday. “We expect to receive an answer within a few days, maximum,” Yuriy Vaskov, Ukraine’s deputy infrastructure minister, said in an interview.

The agreement was brokered in July by the UN and Ankara to end Russia’s blockade of Ukraine’s ports following Moscow’s full-scale invasion of its neighbour in February. Since then more than 9mn tonnes of grain have passed through Ukraine’s Black Sea ports.

Ukraine is one of the world’s leading suppliers of grain and other agricultural products. Food security experts have warned that shortages triggered by the war will lead to further price rises, with serious consequences for poor countries already facing a crisis caused by the impact of climate change and the Covid-19 pandemic.

Vaskov noted that 15 vessels carrying grain had sailed from Ukrainian ports since Monday despite Russia’s suspension of its participation in the Black Sea deal. But he said Moscow’s swift return was crucial to addressing the security concerns of insurers, which have warned that without it they would be unable to offer risk coverage for vessels transporting grain through the war zone.

Ukrainian president Volodymyr Zelenskyy thanked the UN and Turkey for preventing “Russian efforts to destroy the grain agreement,” but he also called for further action to provide “reliable and long-term protection” to his country’s right to export commodities.

“Russia should clearly know that it will receive a tough response from the world to any steps that disrupt our food exports,” Zelenskyy said in his overnight video address. “This is literally a matter of life for tens of millions of people.”

Dmitry Peskov, President Vladimir Putin’s spokesman, said on Monday that continued Black Sea grain shipments without Russia’s backing would be “much more risky, dangerous and unguaranteed”. However, Russia has not threatened to attack such vessels.

Shipments departing this week remain covered as insurance quotes are valid for seven days, but Russia’s return to the initiative was “necessary for the market”, Vaskov said.

Agriculture exports are a top source of foreign currency inflows for Ukraine, which has relied heavily on foreign bailouts to finance its budget. At stake is also the ability of Ukrainian farmers to finance future harvests. Kyiv-based investment bank Dragon Capital said in a note to investors this week that “a prolonged disruption in seaborne exports would adversely affect 2023 plantings”.

This week’s shipments were flowing efficiently, and inspections of vessels by Ukrainian, UN and Turkish personnel were conducted “four times faster” without Russia, Vaskov said. The ships are inspected near Istanbul before entering the Black Sea en route to picking up grain at Ukrainian ports and again after leaving the waterway.

According to Vaskov, Russian inspectors had in previous months dragged out the inspection process, triggering long queues and leaving Ukrainian ports operating at 30 per cent of capacity.

Ukraine could “export 6mn or even 7mn tonnes per month” under the agreement if the process were allowed to run smoothly, he said. “We will work efficiently to provide world food security.”

A swift resolution was crucial, he added, pointing to a backlog of more than 100 incoming vessels awaiting inspection west of the Bosphorus strait.

Ukraine had received information that some grain exporters, which hire the cargo ships, had cancelled charters, Vaskov said: “Maybe it’s connected with insurance or maybe its [the] delays, because some of them are waiting for two weeks or more for inspections.”

The UN said late on Tuesday that no vessels would move through the Black Sea corridor on Wednesday. Ukrainian officials said the decision was technical, with no politics or security factors involved.

Oleksandr Kubrakov, Ukraine’s infrastructure minister, and Amir Abdulla, UN co-ordinator for the Black Sea grain initiative, in separate comments on Twitter said grain vessels would resume departures from Ukrainian ports on Thursday.

“On November 3, eight vessels with agricultural products are expected to pass through the grain corridor. We got confirmation from UN,” Kubrakov said.



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