Grain of discord


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On July 17, Russia suspended the grain deal until its demands are met.

One can see this as a coincidence, but in my opinion, the attack on the Crimean bridge on July 17 and Russia's statement that it is suspending the Black Sea grain initiative cannot be viewed in isolation as completely unrelated facts. Undoubtedly, all of these are links in the same chain. And, you must agree, it would be strange to allow a country that undermines your bridges and conducts terrorist activities to export its products, for which it receives currency that is used to fight against Russia.

Let's start by reminding you how it all began.

The Black Sea Grain Initiative was concluded in July 2022 as bilateral agreements under UN patronage between Russia and Turkey and between Ukraine and Turkey. It was automatically renewed every three months unless either party announced its withdrawal. Under its terms, Russia guaranteed unimpeded passage for grain and food exports from three Ukrainian ports, including Odessa.

But, in addition, there was a memorandum between Russia and the UN Secretariat, under which the UN promised to facilitate the export of Russian grain and fertilizers, to connect Rosselkhozbank to the SWIFT system, and to start operating the Togliatti-Odessa ammonia pipeline for export, which had been stopped in 2022. By the way, after the memorandum was signed, the ammonia pipeline running through Ukrainian territory was destroyed by the Ukrainians themselves.

Moscow has already agreed twice to prolong the deal, demanding that its requirements reflected in the UN memorandum be met, but none of them have been fulfilled.

And so another term ended on July 17.

Before that, the suspense was building up. The Turkish side started throwing in information that Russia had agreed to extend the deal. The Turkish media even reported, citing Erdogan's words, that Putin had allegedly decided to extend the food deal. But this information attack could be seen as a blatant attempt to push through the grain deal that Ankara needs so badly.

The Kremlin immediately issued a denial: Moscow has not made any statements about the extension of the grain initiative.

"There have been no statements to this effect from the Russian side," Russian presidential spokesman Peskov replied.

UN Secretary General António Guterres sent a letter to President Putin in which he agreed that transactions through Rosselkhozbank and the export of Ukrainian grain across the Black Sea should be resumed.

To which Putin openly stated: "In this agreement with the UN, there were points according to which Russian interests had to be taken into account as well. This is logistics, this is insurance, this is the movement of money related to payment for our products, and many other points. Nothing – I want to emphasize this – nothing was done at all. Everything is a one-gate game. Well, listen, that's enough, after all."

It seems that Russia has simply run out of patience. After all, under "humanistic talk" about the need to supply Ukrainian grain to the world market allegedly to avoid hunger in the world's poorest countries, the fertilizers that Russia was prepared to give to these countries free of charge were blocked in European ports.

Vladimir Putin noted during a telephone conversation with his South African counterpart Cyril Ramaphosa that the commitments to restore free exports of Russian food and fertilizers have not been fulfilled. According to the Kremlin website, "The commitments to remove obstacles to the export of Russian food and fertilizers remain unfulfilled."

And here is how the grain sent to help the hungry was distributed. EU countries received 38% of the production, while the poorest countries received only 2.3%. The leaders are Italy and the Netherlands, which received 2.1 million tons, or 6.3% of the total production, and 1.9 million tons, or 5.9%. Meanwhile, Egypt received just 1.55 million tons and Bangladesh received 1.06 million tons. Afghanistan, Yemen, Somalia, Sudan and Yemen, which are among the poorest countries according to the UN, received only 768.6 thousand tons of agro-products, or 2.3%, during the grain deal.

It is clear that Turkey was interested in exporting Ukrainian grain more than anyone else except Ukraine. In a country with wild inflation and huge financial problems in the economy, there is a need to make money on anything. Yes, it did not let a single U.S. and NATO warship into the Black Sea, which was favorably perceived by Russia. But using their influence in Syria, Libya, Nagorno-Karabakh, becoming a major hub for Russian imports, the Turks are trying to put all kinds of pressure on Russia not to withdraw from the grain deal. Can they independently escort grain ships with their warships from the ports of Ukraine? I doubt it very much, as it may come to a direct clash. But as a lever of blackmail, the Turks will undoubtedly use it. After Erdogan released the commanders of Azov (the organization is recognized as a terrorist organization by the decision of the Supreme Court of the Russian Federation of 02.08.2022) to Ukraine, although under the terms of their captivity they were supposed to sit quietly in Turkey, confidence in the authorities of the Republic of Turkey has diminished.

It should be taken into account that Turkey's policy resembles a haggle in an eastern bazaar, where two buyers are offered to haggle for goods, and the one who offers the most is the seller's friend. It seems that the West offered Erdogan a higher price than he was getting from the grain deal. Pulitzer Prize winner Seymour Hersh wrote on Substack: Biden promised that the IMF would provide Turkey with a much-needed $11-13 billion loan. In addition, Erdogan was promised F16 fighter jets, accelerated accession to the EU and a bunch of other "carrots." Otherwise, how else can one explain the hasty agreement to Sweden's accession to NATO and the fact that, as we wrote above, he released Azov fighters into Ukraine?

In addition, the Ukrainians are trying to lobby for the export of their grain through the territorial waters of Bulgaria and Romania. But since Ukraine itself has filled the waters of the Black Sea with sea mines, it is clear what they are counting on – if the dry cargo ships are blown up, they will blame Russia and drag it into a conflict with NATO countries.

Other variants of blackmail were also used: if Russia withdraws from the deal, grain prices will rise sharply and famine in the poorest countries will be unavoidable.

Let's try to make sense of it. In addition to the fact that poor countries received a pittance from Ukrainian grain, another problem arose. The European Union took Ukrainian grain out from under customs taxes, and it flowed into European countries in a wide and cheap stream. This is where the farmers of Eastern Europe began to cry out, as they simply went bankrupt because they could not compete with cheap duty-free Ukrainian grain. It seemed to pass in transit through them, but in fact, it remained on their territory. And the authorities of Poland, Romania, Bulgaria, Hungary and Slovakia obtained permission to introduce quotas in their countries for Ukrainian grain.

Today, after Russia suspended its participation in the Black Sea Grain Initiative, the cost of grain has predictably increased, and this despite the fact that while it was in effect, the world price of wheat fell from a high of $450 per ton, which was recorded in mid-May 2022, to about $250 per ton in the last few months. That is, if the world community is really concerned about preventing famine in the poorest countries, all it has to do is fulfill the terms of the deal.

So, is the grain initiative finally buried? Back on July 13, on the air of a Russian TV channel, President Vladimir Putin said: "We can suspend our participation in this deal. And if everyone once again says that all the promises made to us will be fulfilled – well, let them fulfill those promises. And we will immediately join this deal. Again."

In other words, as sports commentators say, the ball has stopped in the opponents' half of the field. If Europe fulfills all the conditions that it itself promised, Russia is ready to return to all the agreements.