Crunch Time Looms for Black Sea Grain Export Deal

Diplomats are racing against time to negotiate a full extension of the Black Sea Grain Initiative before it expires on Saturday, a major test for the rare wartime agreement that helped stabilize global food prices after Russia’s invasion of Ukraine.

For now, diplomats negotiating the agreement appear to have averted the worst-case scenario—Russia’s complete withdrawal. Despite repeated threats that it would suspend its participation, Moscow has offered to extend it for a 60-day period, just half of the 120-day duration secured in the previous extension. Russian officials are framing this plan as a done deal. But Ukraine, Turkey, and the United Nations have all pushed back against the shortened period and pressed Moscow to stick to the deal’s original term of 120 days, although the language of the deal allowed parties to “modify” it.

A collapse or interruption of the grain deal could have far-reaching consequences beyond Europe, as humanitarian officials brace for food shortages in conflict-ridden areas such as East Africa grappling with prolonged droughts and possible famine. Ukraine accounts for approximately 10 percent of the world’s wheat exports, 40 percent of its sunflower oil supply, and 20 percent of its corn exports, all of which were throttled after Russia invaded Ukraine more than a year ago.

“It is absolutely critical that the U.N. renews the Black Sea grain deal,” said Shashwat Saraf, the regional emergency director for East Africa at the International Rescue Committee aid group. “Somalia is on the verge of famine and is facing an unprecedented drought, and Kenya and Ethiopia have incredibly alarming hunger statistics. Without a grain deal renewal, Somalia is likely to reach famine faster, and Kenya and Ethiopia will continue to suffer.”

After a major diplomatic breakthrough in July 2022, the U.N.-brokered deal enabled 24 million tons of grain blockaded in Ukraine’s Black Sea ports to reach the global market, easing pressures on the world’s most vulnerable import-dependent countries. About three-quarters of Ukraine’s agricultural exports cross the Black Sea—and half of those leave ports protected under the grain deal. After skyrocketing by almost 60 percent in the wake of Russia’s invasion, wheat prices have largely returned to prewar levels.

Saraf and others are pushing for a prolonged grain deal extension of 12 months to reduce uncertainty and price pressures in food markets, but Russia’s diplomatic posturing shows that’s a far-flung prospect.

Russia likely pushed a 60-day extension “because it realizes the geopolitical and economic and humanitarian consequences of refusing to renew the deal,” said Chris Barrett, an agricultural economist at Cornell University. “It doesn’t want the bad PR, but it’s trying hard to scupper it, so it is trying to severely constrain how much Ukraine can really export to the rest of the world.”

For Ukraine, half a loaf could really be less than half. Shortening the length of the deal to 60 days can limit the kinds of contracts that can be honored and complicate ongoing issues with inspection delays, thereby limiting the volumes of grain that can leave the Black Sea. Since there is always uncertainty when deals expire, shipping tends to slow in the week before a renewal is signed, which further lowers actual export volumes.

When it comes to extending the deal, “the longer the better,” said Joseph Glauber, a senior research fellow at the International Food Policy Research Institute and former chief economist at the U.S. Department of Agriculture.

Russia has long attempted to upend the agreement in a bid to gain more political leverage over the United Nations and Western powers backing Ukraine, repeatedly threatening to end its involvement and at one point even briefly withdrawing from the deal in October, when it was last up for renewal. The biggest sticking point in this round of negotiations is Russia’s food and fertilizer exports. While Western sanctions exclude Russian agricultural products, Moscow says the sanctions have hampered those exports by targeting Russian insurers and payment companies.

“Russia is using its participation in the Black Sea Grain Initiative to try and get concessions in other areas,” said Caitlin Welsh, the director of the Global Food Security Program at the Center for Strategic and International Studies. “It’s using this as leverage.”

“Russia wants to have its cake and eat it, too,” she added. “It wants to be able to invade a major agricultural producer, cause disruption in global agricultural markets, and also not experience any disruptions itself.”

Russia’s position hinges on “progress toward the normalization of our agricultural exports, including bank payments, transport logistics, insurance, unfreezing of financial activities, and the supply of ammonia through the Togliatti-Odessa pipeline,” said Russian Deputy Foreign Minister Sergey Vershinin. Ammonia is a key input in fertilizer production.

Experts and Western officials accuse Russia of negotiating in bad faith by trying to shorten the deal while easing its own sanctions pressure. “Russia has used the grain deal as a bargaining chip to hold over the heads of Ukrainians but also international negotiators,” said Jonathan Katz, a scholar at the German Marshall Fund think tank and former U.S. Agency for International Development official.

The negotiations are taking place against the backdrop of spiking tensions between Russia, Ukraine, and Western powers in the Black Sea, on the periphery of the deadly battlefields across eastern Ukraine. On Tuesday, a Russian jet intercepted and collided with a U.S. surveillance drone, forcing it to crash into the Black Sea and alarming American officials.

At the same time, Moscow is also wary of alienating countries that are among the most vulnerable to spiking food and fertilizer prices. A month before the original deal was crafted, Senegalese President and African Union Chairman Macky Sall met with Russian President Vladimir Putin to urge the release of Ukrainian grain exports. This month, Russian Ambassador to Malawi Nikolai Krasilnikov also pledged to ship 20,000 tons of fertilizer to Malawi and 260,000 tons of fertilizer to other countries in Africa, while expressing his hopes that those countries would oppose Western sanctions against Russia.

“[Russia] clearly cares about its self-interest, and it needs allies,” Barrett said. “And those allies are disproportionately grains-importing and oilseeds-importing countries that need Ukrainian commodities as much as they need Russian commodities.”

Katz said that even if concessions are made and a deal is struck for a renewal of the export scheme, Putin shouldn’t get any accolades. “Russia doesn’t deserve a medal for creating a war, carrying out war crimes, and causing global instability that caused this food crisis in the first place.”