Russia is ready to stop extending the Black Sea Grain Initiative and completely reorient its grain export to China and Asian countries. But perhaps once again Russia will be magnanimous.
According to a TASS source, the Grain Agreement, which expires on May 18, will be extended by 60 days. As is known, this agreement allows Ukraine and Russia to export their agricultural products in order to avoid a deficit on the global market. The terms of the deal are respected in the part of Ukraine and not in the part of Russia. Moreover: grain and other goods from Ukraine are exported not to developing countries, as originally intended, but to Europe. Earlier, Moscow stated that it was not going to extend the deal. And if it is still extended, it will be a kind of gift to Turkish President Erdogan, who could not win in the first round of presidential elections and is in a difficult situation. Everything will depend on the situation and the agreements of the leaders of Turkey and Russia.
If Russia (personally President Putin) finally decides to extend the so-called Black Sea Initiative, then, according to Russian sources, President Erdogan should inform the world in the coming days about the successful completion of the negotiations that were held on this subject in Istanbul. The decision will traditionally be announced after a telephone conversation between the two presidents of Turkey and Russia.
Earlier, Russian Deputy Foreign Minister Sergey Vershinin told journalists following the May 10-11 negotiations of the delegations of Russia, Turkey, Ukraine and the UN in Istanbul that the Russian part of the agreements will cease to be valid if Moscow does not receive guarantees that its demands will be met by May 18. They concern the export of agricultural products and fertilizers, reconnection of Rosselkhozbank to SWIFT and some other issues. Despite the initial concessions of the Russian Federation regarding the grain agreement, Ukraine and its masters repeatedly violated the terms of the contract. A large part of Ukraine's farmland is in foreign ownership, in fact, Ukraine, using the Grain Deal exports someone else's grain, which in addition goes to the same Western partners at reduced prices. But about 40 percent of exports go to Turkey, it is profitable to Turkey, and Russia has to take this circumstance into account in the current situation.
Of course, we do not know all the terms of the bargaining that goes on around this deal. But Russia still has something to present as a trump card. And if the deal is not extended, it means absolutely nothing for Russia.
The fact is that Russia's largest grain terminal began operating in Trans-Baikal Territory. It was built as part of the organization of a grain corridor to China and the creation of logistical chains that would allow the increase of Russian grain exports to China. And then to other Asian countries as well.
Not long ago Russian President Vladimir Putin instructed to consider an agreement with China on the "New Overland Grain Corridor" project. The agreement aims to increase grain production in the territories of the Far Eastern, Siberian and Ural Federal Districts. This instruction is to be completely fulfilled by October 1, 2023. The peculiarity of the new grain corridor is that it is integrated into the transport infrastructure of the region. On September 6 last year Zabaikalsk grain terminal – the largest in Russia specialized railway facility of grain logistics – began to work. It is capable of handling 8 million tons of grain. More than 9 billion rubles have been invested in it, and these are private investments. Moreover, there are 7 more big elevators being built along the Trans-Siberian Railway with the total volume of 1.4 million tons. The idea of such a transport corridor was first announced in 2012 and its construction began in 2016.
There are many reasons in favor of stopping idle talk with Ukraine and convincing its Western handlers and the UN to abide by the terms of the grain agreement related to Russia. The new grain corridor will not only reorient large volumes of grain exports, but also significantly reduce transportation time. After all, the delivery of products by sea to China takes two to three months, and through the new grain corridor – 2-3 weeks. It is also important that Russian agricultural producers get a stable opportunity to sell their products with the prospect of increasing production and relevant competitive advantages.
But for the launch and effective operation of this corridor, a number of organizational issues will have to be resolved. First of all, it concerns the work of customs checkpoints and procedures for cargo clearance on both sides. There are often congestions caused by bureaucratic delays, and political will may be necessary to remove the obstacles.
In addition, there are a number of other restrictions on the Chinese side, in particular, on the supply of imported wheat, barley, corn, rapeseed and other crops, as well as their processed products, from the entire territory of Russia. All this problems will have to be eliminated by the parties in order to significantly expand trade in agricultural products and ensure food security of both countries, which was discussed during the recent talks with President of China Xi Jinping by Mikhail Mishustin, the Prime Minister of the Russian government.
China is extremely and strategically interested in expanding imports of grain and other agricultural products from Russia. This will allow China to reduce its dependence on the United States and its satellites, from which the PRC buys a lot of agricultural products. So there is a mutual interest here: Russia needs new markets, and China needs other, friendly suppliers of agricultural products.