Russia said on Monday it would withdraw from a wartime agreement to allow grain exports from Ukraine through the Black Sea until its demands to ease sanctions on its own are met. agricultural exports, backing away from an agreement to help stabilize global food prices and ease component shortages. of Africa and the Middle East.
The agreement, known as the Black Sea Grain Initiative, was struck a year ago, brokered by the United Nations and Turkey, to alleviate a global food crisis after Russia’s full-scale invasion of Ukraine. Russia has blockaded Ukrainian ports, blocked ships from carrying its grain and sent global prices soaring to record highs. The deal has been extended three times, most recently in May. The latest extension expired on Monday.
United Nations secretary general António Guterres said he was “deeply disappointed” by Moscow’s decision, and the millions of people facing hunger, as well as consumers facing a crisis at the expense of lifestyle, will “pay a price.” He also said he sent proposals last week to Russian President Vladimir V. Putin to facilitate Moscow’s demands. Mr. Putin never responded directly, a UN spokesman said.
Russia has repeatedly complained about the deal, which it calls one-sided in favor of Ukraine. Moscow says Western sanctions, imposed over Moscow’s devastating war, have restricted the sale of Russian agricultural products, and Moscow has sought guarantees that would free up those exports. .
In April, Russia’s Foreign Ministry also listed other demands to renew the grain deal: reconnect the state-owned Russian Agricultural Bank with the international SWIFT messaging service critical for payments in cross-border; lift restrictions on maritime insurance and on the supply of spare parts used in agricultural machinery; end sanctions against fertilizer companies and people associated with them; and restore an ammonia pipeline crossing Ukraine.
The Kremlin spokesman, Dmitri S. Peskov, who announced Monday that the Black Sea grain deal had been “suspended,” said, “As soon as the Russian side is fulfilled, the Russian side will immediately return to implementation of that agreement.”
Russia’s announcement came hours after a deadly attack on the Kerch Strait Bridge that connects the occupied Crimea Peninsula to mainland Russia. Mr. Peskov said the decision to suspend the grain deal was not connected to the attack.
Ukraine is one of the world’s leading exporters of wheat, corn, sunflower seeds and vegetable oil. It exported 32.9 million tons of grain and other food under the initiative, according to UN data. Under the agreement, ships are allowed to pass through Russian vessels that have prevented other vessels from using Ukrainian ports since the start of the Russian war. The ships were inspected off the coast of Istanbul, in part to make sure they were not carrying weapons.
The effects of the suspended grain deal were quickly apparent. It has disrupted wheat markets, seesaw prices and exposed vulnerable countries in Africa and the global south to the prospect of a new phase of food insecurity.
Chicago wheat futures, a barometer for global prices, jumped more than 4 percent as the Kremlin’s move threatened a key trade route to global markets for grain from Ukraine. Later, prices moved more than 1 percent lower for the day.
Secretary of State Antony J. Blinken told reporters at the State Department on Monday: “I hope that every country is watching this carefully. They will see that Russia is responsible for denying food to people in dire need around the world.”
John Kirby, a spokesman for the US National Security Council, called Russia’s move a “military act of aggression” and said the United States was already seeing an increase in global prices for wheat, corn and soybeans.
“We urge the Russian government to immediately reverse its decision,” he added.
Russia’s decision appears to be part of a broader effort by Mr. Putin to reassert an aura of unchallenged authority after a failed uprising by the Wagner mercenary group, said Timothy Ash, a senior strategist at BlueBay Asset Management in London and an expert in Russia and Ukraine.
“It’s going to hurt specific countries that rely on these exports,” Mr. Ash said. But more than that, “it shows how weak Putin is after Wagner’s coup: He’s now desperate to take any action he can.”
Ukrainian President Volodymyr Zelensky said Moscow violated its agreement with the United Nations and Turkish president Recep Tayyip Erdogan, rather than with his country, because Ukraine broke with two mediators over the grain. In statements conveyed by his press office, Mr. Zelensky added that Ukraine is ready to resume shipments if the United Nations and Turkey come to an agreement.
With Black Sea ports closed again, Ukraine may have to double down on its use of alternative routes, exporting grain by truck, train and river barge — journeys that take longer than shipping by sea, and cannot bear the same quantity.
Mr. Blinken said the United States would help Ukraine find other ways to export, but that “it’s really hard to replace what’s being lost now as a result of Russia’s food weaponization.”
Mr. Erdogan said he would talk to Mr. Putin about the deal and expressed hope that it could be revived. “Despite today’s statement, I believe that the president of the Russian Federation, my friend Putin, wants the continuation of this humanitarian bridge,” Mr. Erdogan said in Istanbul.
The agreement between Ukraine and Russia – which is also a major global supplier of grain, oil and other affordable food products – is particularly important to the 14 African countries that depend on the two countries for half of their production. -import of wheat, according to Food and Agriculture Organization of the United Nations. Eritrea is totally dependent on them.
When the grain deal starts in July 2022, Célestin Tawamba, the chief executive officer of La Pasta, Cameroon’s largest producer of flour and pasta, said, “The noose is tightening, so the deal should help us breathe.”
The preliminary agreement allows Ukraine to resume exports of millions of tons of grain that have languished for months. Food prices have fallen more than 23 percent from their peak in March 2022, according to the Food and Agriculture Organization’s Food Price Index. The agreement allowed essential food products to be exported from Ukrainian ports to 45 countries on three continents, the United Nations said.
But again and again, before each agreed-upon extension ran out, Russia signaled it might withdraw from the deal. Last year, after accusing Ukraine of attacking its warships in the Black Sea port of Sevastopol with a swarm of drones, Russia pulled back, ceasing participation in the inspections that are part of the agreement. Then rejoin in a few days.
The collapse of the grain deal dominated the UN Security Council session in Ukraine on Monday. China, a Russian ally, stopped short of directly condemning Russia for withdrawing from the agreement but called on both sides to resume negotiations to restore the deal.
Mr. Guterres had previously said that to help meet Russia’s demands, he had sent proposals to Mr. Putin to “remove obstacles” affecting its financial transactions. He said that the United Nations had proposed enabling a subsidiary of the Russian Agricultural Bank – one of several institutions barred by Western sanctions from SWIFT due to Russia’s aggression – to gain access to the European Commission, and that the agency would developed a custom payment mechanism outside of SWIFT for the bank through JP Morgan.
The UN spokesman, Stéphane Dujarric, said Russia’s response to the letter appeared to come in the form of Monday’s announcement. Mr. Guterres said, however, that the United Nations intended to begin negotiating a new grain proposal with Mr. Putin.
Despite Russia’s move, analysts say, several factors could prevent food prices from jumping to the staggering levels seen just after Russia invaded Ukraine.
For one thing, the global commodity price outlook is weaker than a year ago due to a weak economic recovery in China. A global cost-of-living crisis is reducing demand overall, said Mr. Ash, the strategist. Supply chain stresses are also decreasing, and manufacturing and production costs have cooled, according to an analysis by Oxford Economics, a research institute.
Arlan Suderman, chief commodities economist at financial services firm StoneX, said Russia is still dumping cheap wheat on the global market, “so we’re not running out of wheat right now.”
“This particular development today may not be doing much to risk world hunger,” he said, “but continued escalation with no resolution in sight means the risks are still growing.”
Reporting was contributed by Michael D. Shear, Michael Crowley, Gabriela Sá Pessoa, Daniel Victor, Safak Timur, Cora Engelbrecht, Patricia Cohen, Abdi Latif Dahir and Elian Peltier.