UN scrambles to save Black Sea grain deal with EU ahead of deadline

UNITED NATIONS - The European Commission is helping the United Nations and Turkey try to extend a deal allowing the Black Sea export of Ukraine grain and is open to "explore all solutions," a European Union spokesperson said on Thursday, ahead of the deal's possible expiration on Monday.

The U.N. and Turkey brokered the Black Sea Grain Initiative with Russia and Ukraine in July 2022 to help alleviate a global food crisis worsened by Moscow's invasion and blockade of Ukrainian ports. Ukraine and Russia are among the world's leading grain exporters.

The EU is considering connecting a subsidiary of the Russian Agricultural Bank (Rosselkhozbank) to the international payment network SWIFT to allow for grain and fertilizer transactions, sources familiar with discussions told Reuters on Wednesday.

U.N. Secretary-General Antonio Guterres proposed in a letter to Russian President Vladimir Putin on Tuesday that Moscow allow the Black Sea grain deal to continue for several months to give the EU time to connect a Rosselkhozbank subsidiary to SWIFT, two of those sources familiar with discussions told Reuters.

During a visit to Brussels on Thursday, Guterres told reporters that he had not yet received a response from Russia. He said his letter to Putin contained "concrete proposals that I hope can allow us to find a positive way forward."

According to TASS news agency, Putin said he had not seen the letter from Guterres proposing an extension of the deal, but said Russia was in contact with U.N. officials.

"We can suspend our participation in the deal, and if everyone once again says that all the promises made to us will be fulfilled, then let them fulfill this promise. We will immediately rejoin this deal," he told Russian state television.

A Kremlin spokesman later said that Russia had not taken a final decision on whether to exit the grain deal.

EU 'Open to explore solutions'

The European Commission's priority is to ensure that Ukrainian grain can reach the world market and it calls on all parties to extend the Black Sea deal, an EU spokesperson in Brussels said on Thursday.

"We are assisting the talks led by the U.N. and Turkey as required," the spokesperson said. "We are of course open to explore all solutions that contribute to our objective, whilst continuing to ensure that Russia's ability to wage war in Ukraine is hampered as much as possible."

A key demand by Moscow is the reconnection of Rosselkhozbank to SWIFT. It was cut off by the EU in June 2022 over Russia's invasion of Ukraine in February 2022.

European Commission President Ursula von der Leyen later on Thursday urged Putin to extend the deal. "The ball is in President Putin's court and the world is watching," she said.

Russia has threatened to ditch the Black Sea grain deal because several demands to dispatch its own grain and fertilizer abroad have not been met. The last ship traveling under the Black Sea agreement is currently loading its cargo at the Ukrainian port of Odesa ahead of the Monday deadline.

Ukrainian President Volodymyr Zelenskiy said he spoke with South African President Cyril Ramaphosa on Thursday and that they both agreed it was "vital" to extend the Black Sea deal.

"It is very important that there be no threat to food security anywhere in the world. And Russia must clearly realize that anyone who increases the threat of famine, particularly in critical areas of Africa, terrorizes the entire world with famine," Zelenskiy said in his nightly video address.

'Ball in Russia's court'

More than 32 million tonnes of corn, wheat and other grains have been exported by Ukraine under the arrangement. Russia has complained that not enough reaches poor countries, but the U.N. argues that it has benefited those states by helping lower food prices more than 20% globally.

To convince Russia to agree to the Black Sea deal, a three-year memorandum of understanding was struck in July 2022 under which U.N. officials agreed to help Russia get its food and fertilizer exports to foreign markets.

While Russian exports of food and fertilizer are not subject to Western sanctions imposed after the invasion of Ukraine, Moscow says restrictions on payments, logistics and insurance have amounted to a barrier to shipments.

As a workaround to the lack of access to SWIFT, U.N. officials have got U.S. bank JPMorgan Chase & Co to start processing some Russian grain export payments with reassurances from the U.S. government.

The U.N. is also working with the African Export-Import Bank to create a platform to help process transactions for Russian exports of grain and fertilizer to Africa, a U.N. trade official told Reuters last month. — Reuters