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IN BRIEF: Grain deal terminated failing to fulfil obligations to Russia

Kremlin Spokesman Dmitry Peskov noted that Russia would immediately return to the implementation of the Black Sea agreements as soon as the Russian part of the grain deal is fulfilled

MOSCOW, July 17. /TASS/. The grain deal was terminated due to the fact that part of this initiative concerning Russia has not been implemented yet, Russian presidential spokesman Dmitry Peskov said on Monday.

He noted that the recent Crimean bridge incident could not affect Moscow's position on this issue, which had already been stated by Russian President Vladimir Putin. At the same time, Peskov noted that Russia would immediately return to the implementation of the Black Sea agreements as soon as the Russian part of the grain deal is fulfilled. According to Russia’s First Deputy Representative to the UN Dmitry Polyansky, the decision is final and no more negotiations are planned.

Moscow has already officially notified Turkey, Ukraine and the UN Secretariat of its objections to the extension of the grain deal, Russian Foreign Ministry spokeswoman Maria Zakharova told TASS. Starting July 18, the maritime humanitarian corridor will be closed, while the Joint Coordination Center (JCC) in Istanbul will be disbanded, according to a statement released by the Russian Foreign Ministry. UN representatives in Istanbul said they had received a notice from Russia on the suspension of participation in the agreement.

Concluding the deal

The grain deal was concluded on July 22, 2022, in Istanbul. The first part of the agreements for a period of 120 days with the possibility of automatic extension was signed by the UN and Turkey separately with Russia and Ukraine. It concerned the export of Ukrainian grain across the Black Sea. The second part for a period of three years was signed by the UN and Russia - this memorandum dealt with the removal of restrictions on exports of Russian agricultural products and fertilizers.

On October 29, 2022, Russia suspended its participation in the agreement after Ukraine launched attacks on Russian ships and vessels in Sevastopol. The route of the attack ran partly along the grain corridor. Russia demanded security guarantees for its vessels, and then Russia resumed participation in the deal on November 2.

Deal extension

The agreement was extended three times, the last two times for 60 days. At the same time, Moscow stated that the Russian part of the deal, which has not been implemented, should also be fulfilled.

The UN has repeatedly claimed that Secretary-General Antonio Guterres is in contact with the private sector, governments and the EU to ensure the implementation of the agreements. At the end of May 2023, Guterres presented ideas on how to improve the work of the Joint Coordination Center and ensure the export of Russian ammonia through the Togliatti-Odessa pipeline to Russia, Ukraine and Turkey. Officially, the UN did not disclose any details. However, at the end of June 2023, during consultations, the UN admitted that it could not meet the Russian demands, according to Russian Deputy Foreign Minister Sergey Vershinin.

Negotiations to prolong the grain deal have been ongoing in recent weeks. The UN Secretary-General sent Putin a letter "with specific proposals," but he did not elaborate on his efforts. Turkish President Tayyip Erdogan also stated that Putin presented other proposals.

On July 13, Russian President Vladimir Putin said that Moscow might withdraw from the grain deal. Russia would rejoin immediately if its demands were met. According to him, Russia needs to see some promises fulfilled first.

Russia's requirements

One of Russia's requirements is to reconnect the Russian Agricultural Bank, which handles payments for agricultural exports, to the SWIFT payment system. Another demand is the launch of the Togliatti-Odessa ammonia pipeline. Russia also demanded to lift restrictions on the supply of agricultural machinery and spare parts to the country, as well as to permit Russian ships to enter foreign ports, unblock transport logistics and transportation insurance, as well as assets.

In March 2023, the EU argued that the sanctions do not prevent Russia from exporting agricultural products by sea. At the same time, experts pointed out that these arguments do not correspond to reality.

Global consequences

The price of wheat futures with September delivery on the Chicago Mercantile Exchange grew by more than 3%, reaching $6.84 per bushel by 12:14 Moscow time on Monday. And the Turkish lira hit a new all-time low against the US dollar, trading at 26.31 per $1.

A source in Turkey told TASS that in addition to the EU, the termination of the grain deal will have the greatest negative impact on China and Turkey. According to a TASS source in the industry, companies may begin to refuse to ensure ships heading to Ukrainian ports.

Consequences for Russia

The Russian Grain Union believes that the suspension of the grain deal will have a positive effect on the Russian market. International experts also noted that Russia is unlikely to suffer any damage as a result of withdrawing from the deal. Russian exporters will continue to supply customers with grain at competitive prices, the union said.

International experts also noted that Russia's withdrawal from the agreement is unlikely to affect it. At the same time, according to a source close to the situation, the US, EU and UK may cancel a number of general licenses supporting trade in Russian food and fertilizers.

International reaction

Turkish President Tayyip Erdogan stated that Ankara tried to save the grain deal until the last moment. The Turkish president plans to discuss the agreement with his Russian counterpart over the phone and in person in August. Before that, Turkish Minister of Foreign Affairs Hakan Fidan will meet with Russian Foreign Minister Sergey Lavrov. Erdogan said he believes that Putin would prefer to keep the deal going.

The US urged all parties to the deal to resume negotiations and extend the agreement. In addition, Germany encouraged Russia to continue the grain deal indefinitely.

The EU criticized Russia's action calling them "cynical". The European Union will continue to supply food from Ukraine to global markets, according to High Representative of the European Union for Foreign Affairs and Security Policy Josep Borrell.

In turn, Ukraine intends to do everything to continue grain exports, President of Ukraine Vladimir Zelensky said.

China’s Permanent Representative to the United Nations Zhang Jun said that Beijing supports the continuation of contacts between the parties, but Russia's interests must be taken into account.