The Main Players in Ukraine’s Grain Deal
Since the Russian invasion in February 2022, the Russian Navy has maintained a blockade around key Ukrainian ports, which had threatened the safe export of foodstuffs such as sunflower oil, barley, maize and wheat from one of the world’s breadbaskets. This worked to trap 20 million tonnes of grains within Ukrainian ports that were meant for export, causing international food prices to spike significantly. Whilst Ukraine exports to both developed and developing nations, this economic shock hit the Global South the hardest, causing the United Nations to pursue a Grain Deal for humanitarian reasons.
The Black Sea Grain Initiative was an agreement between Ukraine, Russia, Turkey and the United Nations to allow grain shipments out of the Black Sea. The initiative first came into action on 22 July 2022, and has now expired after extension on 18 July 2023. Current negotiations between Putin and Erdogan have failed during talks in Sochi, on the basis that Russian conditions are not being met. The stagnation of negotiations risks a humanitarian crisis as food prices continue to rise across the world. As it stands, the resurrection of the Grain Initiative is dependent on negotiations between several key players, each of which have their own motivations.
Ukraine:
Whilst the Grain Deal was active Ukraine was able to safely export 33 million metric tons of grains to international markets. The agricultural sector provides work for 14% of Ukrainians, and represents one of their most important exports. A proper ability to export grain will contribute towards a healthy economy, which is critical now more than ever. Ukrainian grain stores must also be emptied as soon as possible in order to make room for this year’s harvest, which otherwise risks loss.
Ukraine also has the potential to leverage grain exports for diplomatic benefits. A newfound focus on meeting World Food Programme (WFP) commitments acts as a key example here, with Ukraine now supplying WFP with more than 80% of its grain, compared to 50% of the War – according to EU sources. As such, the Russian blockade is presented as an act of hostility not just against Ukraine, but against all food importers due to a lack of supply, and rising food prices. These efforts garner sympathies from the Global South, which can translate into substantial diplomatic support with calls against the Russian invasion, or at least the naval blockade.
Russia:
The Russian exit from the Grain Deal was likely motivated by Ukrainian attacks on the Kerch Bridge, which connects Crimea to the Russian mainland. Russia has described such strikes as attacks on civilian infrastructure whilst Ukraine has argued that the bridge was a genuine military target, as it was a key supply point for the Russian Southern front. Nevertheless, Russia has refused to renew the Grain Deal in a recent summit in Sochi on the basis that Russian concerns have not been addressed. As such, Russia is motioning to delay the continuation of the deal until sanctions have been eased on the country. Although the West has not imposed specific agricultural sanctions against Russia, Moscow has said that restrictions such as the disconnection from the SWIFT banking network have deterred shipping firms, international banks and insurers from conducting business with Russian exporters. As a concession, Russia has asked for the state-owned agricultural bank Rosselkhozbank to be reconnected to SWIFT – although this has been refused. As a counter offer, the UN has proposed that Russia establish a subsidiary of the bank which may use SWIFT, or that banks such as JPMorgan Chase or the African Export-Import Bank be used as a payment processor for food and fertiliser – which Russia has rejected. Continued strikes against Ukrainian grain stores and port infrastructure will only exacerbate this issue. As thing stand, Russia will benefit from prolonging this stalemate by likely forcing a more meaningful concession from the West for the continuation of the Grain Deal. As pressure begins to mount from the Global South, this will only become more likely.
Turkey:
Turkey has strategically positioned itself as a mediator and a peacemaker between Ukraine and Russia due to its tactical position to the two warring nations. The Montreux Convention allows Ankara control over the straits granting access to the Black Sea, granting the nation control over potential Ukrainian and Russian naval movements. Turkey also has significant economic ties with Russia, as it receives a third of their natural gas, military equipment and millions of tourists each year. These ties have allowed Erdogan and Putin to engage in a summit at Sochi to discuss the potential renewal of the agreement. Putin has suggested that Russia would be able to ship one million tons of grain to Turkey at reduced prices, to be processed and forwarded to the countries most dependent. Although Putin has rejected the peacemaking effort so far, Turkey still presents itself as the most likely candidate to help reach an agreement between Russia and Ukraine.
The Global South:
A key Russian criticism of the Grain Deal was that a significant part of Ukraine’s grain export was directed towards developed countries, rather than developing countries as suggested. However, UN sources suggested that 57% of foodstuffs exported from Ukraine reached developing countries. Even though 43% of foodstuffs went to developed countries, this still benefits poorer countries as the increased supply depressed the international price, making food more affordable for all. The issue was also raised during the 2023 Russia – Africa Summit, as African leaders pressed Putin to renew the grain deal. On the flip side, the Kremlin has worked to begin supplying key African allies with up to 50,000 tonnes of grain – although this is limited to Burkina Faso, Central African Republic, Eritrea, Mali, Somalia and Zimbabwe. However, this effort is eclipsed by Ukraine’s contribution towards the WFP, which has allowed for a supply of 725,000 tonnes of grain to reach Afghanistan, Djibouti, Ethiopia, Kenya, Somalia, Sudan and Yemen.
EU:
The European Union has expressed that it is capable of aiding Ukraine in exporting its grain via European solidarity lanes. However, these overland trade corridors are under considerable strain, due to Ukrainian railways using a different gauge to EU states, meaning that grain must be physically transferred between wagons – which has considerably slowed the speed of export. Overland corridors have been overloaded, which has resulted in Eastern European states being hit with the majority of the Ukrainian supply. As a result, Ukrainian grain may only be imported into the EU if it does not land in these states, with Poland pushing for an extension in these restrictions until the bloc can invest in increased solidarity lanes. Poland has invested 100 million euros into projects to increase rail capacity, whilst Romania has worked to expand Constanța's port capacity. These measures will surely help the issue, however Brussels estimates that billions of future investments may be needed – and EU coffers are already at their limits.
The EU estimates that only around 30% of Ukrainian grain is transported via road and rail, with the majority still being exported via naval routes. The UK Agriculture and Horticulture Development Board says that 65% of Ukrainian grain exports are leaving via the ports of Izmail and Reni, which are to be transported via Romanian ports. This hyper focus around the Danube has drawn Russian military attention towards the region, with almost daily drone strikes on the ports. Critically, some Russian drone debris has landed in Romanian territory – a NATO state. This flare in tensions will likely not be escalated as it is not seen as an intentional attack on Romania. Nevertheless, the mayor of the Ceatalchioi community in Romania, Tudor Chernega, has asked authorities to consider evacuating residents of the village of Plauru, which borders Ukraine on the Danube. Russian efforts to impede Ukrainian exports are therefore highlighted, which will likely continue to draw criticism from the Global South and Europe alike, and may result in increased sanctions should drones continue to hit EU territory, accidentally or not.
China:
China was the single largest recipient of Ukrainian grain whilst the Grain Deal was active, receiving almost 8 tonnes of goods, worth nearly 25% of the total Ukrainian grain export. UN figures suggest that of the 7.9 million tonnes received, Beijing received 5.8 million tonnes of corn, 1.8 million tonnes of sunflower meal, 370,000 tonnes of sunflower oil and 340,000 tonnes of barley. Whilst China will lose out economically by having to replace these imports at a higher price due to the end of the Grain Deal, Beijing will not press Russia on the issue, as Beijing will simultaneously benefit from discounted Russian exports and market access, due to isolation from international markets.
China has also poised itself to act as a peacekeeper for the conflict, although the nation appears far less capable than Turkey in this regard – perhaps due to its geographical distance and an affinity for Russian policy. China has also been a major supplier of weaponry and microelectronics to Russia during this conflict, which will naturally generate resentment from Ukrainian officials. The Chinese envoy to Ukraine, Li Hui has been criticised in these regards as he may prioritise acting as a mediator, rather than work towards a meaningful agreement for both parties.