The Black Sea Grain Deal is Dead… For Now
The Black Sea Grain Deal is Dead… For Now
Another exciting episode of our favourite cereal
“The Black Sea agreements ceased to be valid today. Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated,” said Dmitry Peskov, spokesperson for the Kremlin.
It's the stuff that makes bread and porridge. It's essential but the abundance of Rice Krispies and Fruit Loops in the unhealthy Western diet makes the topic so boring that people switch off. I'm asking you to eat and think.
The Eat or Die War Trade Deal
The war in Ukraine, and the associated sanctions against Russia, affect the world's two most important grain and fertiliser suppliers.
Consequently, an agreement was made to not kill poorer people - in Africa, Asia, and the Middle East - who are not involved in the conflict. It was also to ensure that European Union (EU) corporations would keep their profits.
The 'Eat or Die War Trade Deal' would've been a catchier name, but the United Nations (UN) and the signatory countries settled on 'The Initiative on the Safe Transportation of Grain and Foodstuffs from Ukrainian ports'. Reporters have simplified that into the 'Black Sea Grain Initiative' and the 'Black Sea Grain Deal'. I'm using the latter because the fate of starving people and fat bankers is affected by political wheeling and dealing.
The Black Sea Grain Deal, which began in July 2022, has been renewed three times despite being plagued by infighting. Its success has meant 33 million metric tons of agricultural products being transported by ships via three Ukrainian ports, crossing international waters to reach Turkey, the distributor.
Russia stopped approving future shipments on 27 June 2023. The final planned ship left the port of Odessa on July 16. The latest contract expired today, July 17. It’s a possible (yes, another) global crisis moment.
A Quick History of the Black Sea Grain Deal
In February 2022, Russia invaded Ukraine to protect the Russian-speaking population of the Donbas who declared independence and asked for help. The Ukrainian Civil War, driven by xenophobia, had been ongoing since 2014 with the world barely acknowledging its 15,000 dead.
But with Ukraine and Russia being agricultural giants, millions of the international population were suddenly also at risk.
Ukraine is a major exporter of wheat, corn, barley, rye, and sunflower oil. Its soil is so fertile that Hitler not only wanted the land to feed Germany but wanted to transport it there. In some areas, during the rainy and post-snow seasons, it becomes mud that is deeper than a man is tall. Russia currently occupies the best of it.
Lebanon, a bread-staple country in never-ending economic crisis, relies on Ukraine for 50% of its wheat. Yemen, Libya, Egypt, Tunisia, Kenya, Ethiopia, Algeria, Sudan, Somalia, Malaysian, Indonesia, and Bangladesh are major importers too.
It's undeniable that there are conscientious people at the UN wanting to save hungry children. The unfortunate political contradiction is that the UN is also the marketing campaign for the military powers controlling it. The UN rang the alarm repeatedly, and Western media painted Russian President Vladimir Putin as the demon who was going to become a mass murderer unless he opened a grain corridor.
Half of reality was overlooked. Western corporate profit was under threat because most of Ukraine's wheat and corn headed to wealthy and middle-income countries. It still does, with only one-third going to the desperate.
Corporate and oligarchic war opportunists have been snapping up the Ukrainian agricultural industry at bargain prices. That began after Maidan in 2014, but has accelerated. They want the deal to continue for the sake of themselves.
In ‘Walking on the West Side, the World Bank and the IMF in the Ukraine Conflict, a report released in July 2014, the Oakland Institute exposed how international financial institutions swooped in on the heels of the political upheaval in Ukraine to deregulate and throw open the nation’s vast agricultural sector to foreign corporations. This fact sheet provides details on the transnational agribusinesses that are increasingly investing in Ukraine, including Monsanto, Cargill, and DuPont, and how corporations are taking over all aspects of Ukraine’s agricultural system. This includes circumventing land moratoriums, investing in seed and input production facilities, and acquiring commodity production, processing, and transportation facilities.
Nevertheless, there was an emergency. Prices surged on stock markets, and price gougers salivated.
Sal Gilbertie, CEO of Teucrium which focuses on agriculture funds, issued a warning:
Remember, bread riots are what started the Arab Spring, bread riots are what started the French Revolution.
Advantages of the Black Sea Grain Deal
The initial Black Sea Grain Deal was signed in Turkey on 22 July 2022.
For Russia, the advantages outweighed the disadvantages. Odessa may be a Ukrainian stage for its war against Russian forces in Crimea, but a profit would be made whilst maintaining good relationships with Third World countries.
Under the agreement, the ports of Odessa, Yuzhne and Chornomorsk were opened. Ukraine's ships would travel safely to Istanbul, checked on arrival and departure to ensure that no banned goods, such as weapons, were on board.
The UN described it as:
The resumption of Ukrainian grain exports via the Black Sea amid the ongoing war is “a beacon of hope” in a world that desperately needs it, UN Secretary-General António Guterres said at the signing ceremony on 27 July in Istanbul, Türkiye.
The UN plan, which is linked to efforts to ensure Russian food and fertilizer reach global markets, supports the stabilization of spiralling food prices worldwide and stave off famine, affecting millions.
The Initiative specifically allows for commercial food and fertilizer (including ammonia) exports from three key Ukrainian ports in the Black Sea – Odesa, Chornomorsk, Yuzhny/Pivdennyi.
Ukrainian vessels guide cargo ships into international waters of the Black Sea, avoiding mined areas. The vessels then proceed towards Istanbul along the agreed maritime humanitarian corridor. Ships heading to and from the Ukrainian ports are inspected by JCC teams comprised of Russian, Turkish, Ukrainian and UN inspectors.
Reuters related the success with:
625,000 tonnes of grain has so far been shipped by the WFP for aid operations in Afghanistan, Ethiopia, Kenya, Somalia and Yemen. In 2022, United Nation's World Food Programme (WF) procured more than half its global wheat grain from Ukraine.
Russia Argues that the Black Sea Grain Deal is Unfair
There was trouble from the beginning. That it hasn't been sorted in one year suggests that the USA, via the UN, has been acting in bad faith.
Russia's state news agency warned that:
We may suspend our participation in this agreement. And if everyone reiterates that all promises given to us will be fulfilled - let them fulfill these promises. And we will immediately join this agreement.
Under the deal, Russian food and fertilizer was allowed to be sold but indirectly obstructed by sanctions on insurance and the method of payment e.g., Rosselkhozbank, the Russian Agricultural Bank, is cut off from the the SWIFT payments system.
Russia wants the Togliatti to Pivdenny pipeline reopened. It used to annually carry millions of tonnes of ammonia, a key fertiliser ingredient. Ukraine has refused.
Russia is also in desperate need of spare parts for its agriculture machinery.
Ukraine is also affected. Gennadiy Ivanov, the Director of BPG Shipping, told the Kyiv Post:
Imagine a situation if there were no grain corridor: huge grain stocks would accumulate in the fields and silos, most of which would most likely be lost. For example, to load 70,000 metric tons of grain through the ports of the Danube, you need to use 10 to 15 coaster ships and 15 to 25 days."
He elaborated that using alternate corridors presents challenges.
There is the vital issue of profitability for farmers, since, in addition to freight and logistics, they also had to include in pricing the cost of waiting for inspections [$7-$13 per ton], war risk insurance [$4-$7 per ton], plus an additional premium for freight [$3-$5 per ton]. If we compare the value of exports through the corridor with these additional costs, the value of losses for the Ukrainian market is huge.
New Problems
It hasn't helped that the West has recently cross lines that used to be red.
Germany is supplying Leopard tanks. The USA has contravened the laws of its own allies by supplying cluster bombs to Ukraine. The USA and the UK are supplying long-range missiles. The Crimean bridge, the 19km structure that connects the Crimean Peninsula to Russia, was closed yesterday after a second Ukrainian attack.
Turkish President Recep Erdogan, the most important wheeler-and-dealer in the Black Sea Grain Deal, recently betrayed Putin by releasing members of Ukraine's far-right Azov battalion. Erdogan then blackmailed the USA for F16 jets in return for it lifting its objection to Sweden joining NATO. But that Machiavellian situation is far from clear, and Erdogan surely needs Putin just as Putin needs him.
Efforts to Renew the Deal
UN Secretary-General Antonio Guterres tried negotiating with Putin last week.
The Kremlin didn’t respond when Erdogan said that Putin had agreed for an extension. If that’s what he was told, he was being played for his betrayal.
South Africa's President, Cyril Ramaphosa, was the next to try. After that call, the Kremlin stated that:
Vladimir Putin stressed that the obligations recorded in the relevant Russia-UN memorandum to remove obstacles to the export of Russian food and fertilizers still remain unfulfilled.
What Next?
Ukraine's alternate options are disastrous. Land routes are too expensive. It would struggle to keep its ships safe leaving Ukraine. Russia would attack them on suspicion that they're carrying weapons. If they made it to the territorial waters of Romania and Bulgarian, that would expand the conflict. Ukraine wants a full-on European war, maybe even World War 3, so the EU and NATO would want to cut off that opportunity.
There's a drought in the Horn of Africa. Somalia is unstable and Sudan is on the verge of civil war. The people in that region will be the first to hope that Russia and the U.S.A. get along enough so that they don't die from the lack of Fruit Loops.
Dmitry Peskov, the Kremlin’s spokesperson, was encouraging.
“As soon as the Russian part of the agreements is fulfilled, the Russian side will return to the implementation of this deal, immediately.”
We're left with the hope of another Black Sea Grain deal. It's also symbolic, a dialogue for food creating the possibility of a dialogue towards peace.
Read ‘The 10 Commandments "Agent Zelensky" Must Obey’: Scott Ritter has released a controversial video that must be viewed.