Fate of Black Sea grain deal unclear

07 July 20232 min reading

The Black Sea grain deal is currently at risk of termination. With its imminent expiration on July 17, Russia remains undecided on extending the pact, citing obstacles to its own grain and fertilizer exports. 

While the United Nations (UN) has called for an extension, Russia asserts that the West must address its concerns before any decision can be made. The potential collapse of this agreement raises significant global implications, affecting food security, grain exports, and shipping logistics. 

Kremlin spokesman Dmitry Peskov stated that Russia has not yet made a final decision regarding the extension of the Black Sea grain deal. While acknowledging that there is still time for the West to address the obstacles hindering its own grain and fertilizer exports, Peskov emphasized that there are currently no particular grounds for extending the deal beyond July 17. Russia has consistently maintained that it sees no basis for renewal due to these obstacles.

Rebeca Grynspan, a top UN trade official, expressed the organization's dedication to extending the Black Sea grain deal. Grynspan emphasized the importance of both agreements, stating that they are crucial for stabilizing food prices and ensuring stable markets for food and fertilizers worldwide. She pledged the UN's commitment to making every effort to continue the agreements and even indicated a potential visit to Moscow to meet with officials before the deal expires.

The Black Sea Grain Initiative, coupled with EU solidarity corridors, has contributed to stabilizing food prices and facilitating exports. Thanks to the agreement, over 30 million tons of grain and other food products have been exported.  If the Black Sea grain deal is not extended, it remains uncertain whether Ukraine will be able to ship the same quantities of grain to the world. The high cost of insuring ships navigating the Black Sea presents a major challenge, as shipping companies might hesitate to send vessels through a war zone without Russian approval. Overland transportation of grain also becomes problematic due to limited freight carriages available for exporting Ukraine's entire grain yield. Additionally, farmers in some eastern EU countries have expressed discontent over Ukrainian supplies passing through their territories, alleging negative impacts on local markets. As a response, the European Union imposed import restrictions that allow the transit of grain through certain countries but prohibit its sale within them.

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