The RAZONI was the first ship to leave Ukraine under the terms of the Black Sea Grain Initiative. Since the deal was signed in July 2022, over 32 million tons of agricultural produce have been exported to 45 countries across three continents.
The Ending of the Black Sea Grain Initiative
On July 17, the UN-backed Black Sea Grain Initiative ended, following Moscow’s decision not to extend its participation in the agreement. Under the deal, Russia allowed safe passage of merchant ships from three Ukrainian ports, to facilitate the export of agricultural produce. The end of the deal will have significant global consequences.
The Russian invasion in February 2022 highlighted Ukraine’s position as a leading producer of cereal crops. In the following months, the effective blockade of merchant ships in Ukrainian ports contributed to global food price inflation and threatened increased famine in drought-hit regions. According to the UN, the deal directly reduced global food prices, and enabled the delivery of over 725,000 tons of wheat to six famine-hit countries. Russia’s withdrawal from the Initiative will likely once again trigger price inflation and exacerbate famine in developing countries.
It remains possible that international pressure will convince Russia’s President Vladimir Putin to resume negotiations, such that the grain deal may be reinstated. Moscow declared that their decision was final, but this may be political brinkmanship aimed at exacting more concessions on fertilizer exports and access to the SWIFT banking system. In each of the previous extensions of the Initiative, in November, March, and May, Moscow prevaricated and left their formal agreement until the last moment. However, if Moscow does not re-engage in negotiations, then global consequences are inevitable.
International Impact of Ukraine Grain
China has been the biggest importer of Ukrainian produce in the last year, receiving one-quarter of all exports. The relationship between Putin and President Xi Jinping will be crucial for the future of the accord. Xi may exert pressure on Putin to resume the grain deal, as the loss of eight million tons of agricultural produce over the next year would be a significant strategic shortfall. Since the two leaders last met in March, Putin has suffered further setbacks in the Ukraine conflict and had his authority challenged by the Wagner Group mutiny. Xi may assess that Putin is in an increasingly weak position and may capitalize on this by seeking preferential terms in future talks.
A major achievement of the grain deal has been to increase grain supply to countries at risk of famine, including Afghanistan, Ethiopia, Kenya, Somalia, Sudan, and Yemen. Often, the grain has passed via Turkiye for milling into flour before onward shipping to Africa. Russia has increased its influence across Africa in recent years, through diplomacy, investment, and the deployment of Wagner Group mercenaries to some countries. Russia’s withdrawal from the agreement will likely negatively impact many African nations. This strategic decision may be resented by African leaders, and thus prompt a reduction in Moscow’s influence on the continent.
If Moscow fails to extend the grain deal, it will also impact European nations. Italy, the Netherlands, and Spain are major importers of produce via the Black Sea. On July 17, Josep Borrell, the EU’s head of Foreign Affairs, denounced Putin’s refusal to extend the deal, accusing Moscow of weaponizing hunger.
Potential Unrest in Europe
The EU will also be concerned for its internal markets. Prices for agricultural produce, such as grains and sunflower oil, and for secondary foodstuffs such as flour, bread, and meat (as much of the grain feeds livestock) are likely to increase sharply in coming months. In a separate dynamic, the EU has faced challenges from Bulgaria, Hungary, Poland, and Slovakia. Ostensibly, Ukrainian produce that is not exported via the Black Sea transits these adjacent countries; however, cheap foodstuffs have flooded their markets, leading to price reductions and threatening the livelihoods of farmers.
In recent months, agricultural workers have staged protests, and governments in Bratislava, Budapest, and Warsaw have banned imports from Ukraine. This action prompted diplomatic tensions with Brussels, which agreed to provide emergency funding for farmers but did not accept these EU members taking unilateral action on trade. If the grain deal does not resume, Ukraine will be forced to export even greater quantities of foodstuffs overland via these countries. National elections will be held in Poland and Slovakia in coming months; in extremis, the combination of food price rises, struggling agricultural sectors, and relationships with Brussels may impact the results of these elections.
Securing Grain Deliveries
In the absence of an ongoing deal, Russia would no longer guarantee safety for merchant shipping in the Black Sea. It is possible, however, that shipping could continue. Shipping companies may continue to trade using their right to free passage, although the deciding factor would be the cost of vessel and cargo insurance, which varies depending on the security environment. It would not be in Russia’s political or military interest to target civilian shipping; Russian warships may harass or disrupt the traffic, but this would expose their ships to attack from Ukrainian anti-ship missiles. Ukraine has no navy capable of defending merchant vessels, so it is possible that a coalition may form, to provide warship escorts for the merchant ships. A NATO-led coalition is unlikely as politicians would likely assess that this would risk conflict escalation. However, a coalition of more neutral nations may be possible, particularly those dependent on grain exports. For example, Algeria, Egypt, India, Israel, and Tunisia have relatively modern navies, capable of such a task. One final factor is that the threat from sea-mines, which was assessed as high in mid-2022, has significantly reduced. Despite more than 1,000 vessel movements since July 2022, there have been no incidents involving mines.
Conclusion
Putin will likely face increasing pressure to resume Russia’s participation in the Black Sea Grain Initiative. Although he is unlikely to be influenced by the UN or the EU, it is possible that leaders in Africa, China, India, and other relatively neutral nations may convince him to restart negotiations. If exports of Ukrainian grain cease, there will be significant global impacts including food price rises and increased likelihood of famine in the poorest countries. It is possible that trade may continue in the absence of Russian security guarantees, however this would also lead to elevated risk for shipping companies.
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