Putin has reason to put the brakes on a grain deal with Ukraine

Top European officials see little chance Russia is willing to ease global food pressures by striking a deal allowing Ukraine to resume key grain exports, and say the Kremlin is viewing the crisis as a bargaining chip on Kyiv and its allies.

Government and intelligence officials say the UN-backed negotiations with Moscow and Kyiv are still struggling to make progress. They asked not to be named when discussing such sensitive matters. Many issues remain unresolved, said a person familiar with the discussions, including how goods can be safely transported in and out of Ukraine.

One of the people said the Kremlin staged the debate as a means of lifting sanctions and intends to use the threat of world hunger as a negotiating tool in future peace talks. The US has not sanctioned Russian agricultural products in response to the war and says there is no link between the sanctions against Moscow and grain or fertilizer exports from Russia or Ukraine.

Russian President Vladimir Putin’s invasion has wreaked untold human and economic devastation in Ukraine, forcing millions of people to flee within or to Europe. It has also triggered what many policymakers are warning that there could be a deepening food crisis around the world, with supplies of Ukrainian agricultural commodities disrupted while prices are already rising and shortages are being felt as far away as North Africa and Asia.

With Ukraine’s Black Sea ports littered with mines and Russia effectively blocking shipping in the region, countries from Turkey to the US have been scrambling for a solution to get Ukrainian grain moving again. It is estimated that more than 25 million tons of grain, sunflower oil and other commodities are stuck. The government in Kyiv has also accused Moscow of stealing its grain stocks and transferring them to Russia and of attacking warehouses with rockets. Russia denies using food as a weapon.

There is hope that Ukrainian and Russian ministers could meet for talks in Istanbul, Turkey this week, according to a person familiar with the talks. The UN-backed talks would aim to reach the outlines of an agreement this month to move 2 million tonnes of grain a month from July, the person said.

Russian Foreign Minister Sergey Lavrov met his Turkish counterpart Mevlut Cavusoglu in Ankara last week. The talks, to which Ukraine says it was not invited, made no progress.

In any case, Ukraine is unlikely to agree to a request by Moscow to remove mines from ports placed to protect them from possible attacks by Russian forces. Kyiv said it was unconvinced by Moscow’s assurances it would not strike, noting that even before the war Russia insisted it had no plans to invade.

The crisis has sparked a race against contingency to get grain out of Ukraine via alternative routes across Europe ahead of the arrival of the next harvest. President Volodymyr Zelenskyy said that the amount of grain waiting to be shipped out of Ukraine could reach 75 million tons in the autumn after this harvest.

Demining would take months even if agreed. GRAin could instead move to the Bosphorus from three Black Sea ports through “safe lanes” in Ukrainian territorial waters, one of the people said. It’s unclear how this would avoid the need to clear mines from ports to allow ships to dock and pick up grain before passing through these marked lanes. Cavusoglu said Wednesday it was not necessary to clear all mines to set up the corridor.

There is a separate discussion between the EU and other nations over the use of ports in Poland and Romania and the possibility of rail links to more distant ports in the Netherlands, Germany and the Adriatic, the person said. President Joe Biden said Tuesday the US is working to build makeshift silos in Poland and elsewhere along Ukraine’s border and then ship grain on trains.

Mined ports, bureaucracy and Russia risk stop Ukrainian grain

Overland routes are likely to be much slower and face their own logistical challenges, including congested rail networks, congested ports in Eastern Europe and differing gauges to Europe. Even if these issues were all resolved, it would not fully replace exports from Black Sea ports, the person said.

An official said the biggest problem of all is a lack of trust in Russia. Putin has directly linked the freeing of Ukrainian grain shipments to the lifting of sanctions against Russia, and his officials continue to claim that food shortages are the result of those sanctions.

A senior European intelligence officer said Moscow is spreading a similar message through influence and disinformation operations in the Middle East and Africa.

US and European sanctions do not target Russia’s agricultural sector or the transport of food and agricultural goods. EU restrictions do not prevent Moscow from exporting its fertilizers to third countries. And that’s despite the reluctance of some shippers, banks and insurers to trade in Russian fertilizer, while the US government is now quietly encouraging companies to buy and ship more of it.

Ukraine’s agribusiness lost $4.3 billion to war damage

Any agreement on shipping must come with an assurance that Russia will not target Ukraine’s storage facilities, transport and export infrastructure, one person said.

Both sides must also agree on inspections, with UN flag seen as a possibility. Russia has said it wants to control such controls, the person said.

Other operational challenges include sourcing large ships, safely transporting grain from different parts of Ukraine to ports, and insuring the cargo.

Officials are also pessimistic about the chances of a deal that would see Ukrainian grain shipped via neighboring Belarus, a country that has been used by Russia as a base to transport troops to Ukraine.

A senior intelligence officer said it was likely Russia was coordinating with Belarus, which is keen to drop its own sanctions. Ukraine has already ruled out using Belarus as a channel.

Bloomberg