Wrapup 9: Ukraine grain export deal back on as Russia resumes participation

Petro Welt Technologies AG

01/11/2022 23:29

(Adds note passed to Erdogan, insurer resumes cover, Kyiv
comment)

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      Turkey says grain deal to resume midday on Wednesday
    

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      Russia says it has received guarantees from Ukraine
    

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      Announced guarantees go no further than original deal
    

  
    By Ali Kucukgocmen and Pavel Polityuk
       ANKARA/KYIV, Nov 2 (Reuters) - Russia said on Wednesday
it would resume its participation in a deal freeing up grain
exports from war-torn Ukraine, reversing a move that world
leaders had said threatened to exacerbate global hunger.
    Moscow announced the sudden reversal after Turkey and the
United Nations helped keep Ukrainian grain flowing for several
days without Russian participation in inspections.
    The Russian defence ministry justified the u-turn by saying
it had received guarantees from Kyiv not to use the Black Sea
grain corridor for military operations against Russia. Kyiv did
not immediately comment on that, but has denied in the past that
it used the agreed shipping corridor as cover for attacks.
    "The Russian Federation considers that the guarantees
received at the moment appear sufficient, and resumes the
implementation of the agreement," the Russian ministry statement
said.
    The grain deal, originally reached three months ago, had
dispelled a global food crisis by lifting a de facto Russian
blockade on Ukraine, one of the world's biggest suppliers. The
prospect that it could fall apart this week had revived fears of
global hunger and pushed up prices.
    Russia suspended its involvement in the deal on Saturday,
saying it could not guarantee safety for civilian ships crossing
the Black Sea after an attack on its fleet. Ukraine and Western
countries called that a false pretext for "blackmail" using
threats to the global food supply.
    But Russia's suspension failed to stop shipments, which
resumed on Monday without Moscow's participation, in a programme
backed by Turkey and the United Nations. Turkish President
Tayyip Erdogan said Russian Defence Minister Sergei Shoigu had
told his Turkish counterpart that the deal would resume.
    "The grain transports will continue as agreed before as of
12 (pm) today," Erdogan said, appearing to read from a note that
an aide passed to him as he addressed members of his AK Party.
    The prices of wheat, soybeans, corn and rapeseed fell
sharply on global markets following the announcement, which
eased concerns about the growing unaffordability of food.
    Although Russia's suspension did not stop the flow of
Ukrainian grain, insurance companies had paused issuing new
contracts, raising the prospect that shipments could halt within
days, industry sources said. But Lloyds of London insurer Ascot
told Reuters after Wednesday's resumption announcement that it
had resumed writing cover for new shipments.
    FUTURE STILL IN DOUBT
    "This is quite an unexpected turnaround," Andrey Sizov, the
head of Russia-focused Sovecon agriculture consultancy, said of
Russia's decision.
    "Still, the deal remains shaky, as it is now back in
guessing mode as to whether there will be an extension or not.
With two weeks to go before the extension, the discussion around
this topic will apparently continue," Sizov added.
    The deal runs out on Nov. 19 and a European diplomat briefed
on the grain talks has told Reuters that Russian President
Vladimir Putin was likely to use the possible extension as a way
to gain leverage and dominate next month's G20 summit in
Indonesia.
    German Foreign Minister Annalena Baerbock said the
resumption showed the importance of standing firm in the face of
Moscow's demands.
    "This is an expression of how important it is that those who
believe in the international order...stand together in these
difficult times and do not allow themselves to be blackmailed by
Russia," she told broadcaster Welt.
    A senior Ukrainian official who declined to be identified
told Reuters that Moscow's decision was mainly the result of
Turkish pressure on Russia.
    Ukrainian Infrastructure Minister Oleksandr Kubrakov
expressed gratitude for the roles played by Erdogan and U.N.
Secretary-General Antonio Guterres.
    Ukrainian President Volodymyr Zelenskiy said earlier that
the world should respond firmly to any Russian attempts to
disrupt Ukraine's export corridor across the Black Sea, which
was blocked after Moscow invaded Ukraine on February 24.
    The Russian blockade has exacerbated food shortages and a
cost of living crisis in many countries as Ukraine is one of the
world's biggest suppliers of grain and oilseeds.
    In a Tuesday night video address, Zelenskiy credited Turkey
and the United Nations for making it possible for ships to
continue moving out of Ukrainian ports with cargoes.
    "But a reliable and long-term defence is needed for the
grain corridor," Zelenskiy said. "At issue here clearly are the
lives of tens of millions of people."
    The grains deal aimed to help avert famine in poorer
countries by injecting more wheat, sunflower oil and fertilizer
into world markets. It targeted the pre-war level of 5 million
metric tonnes exported from Ukraine each month.
    RETREAT
    Turkish Foreign Minister Mevlu Cavusoglu earlier said Russia
was concerned about its fertilizer and grain exports, echoing
Russian officials in saying ships carrying them could not dock
even though the exports were not included in Western sanctions.
    There was no mention of any concessions on those issues in
the Russian statement on the resumption.
    Russian political analyst Tatiana Stanovaya said Moscow's
decision to resume the agreement had nothing to do with any
guarantees from Ukraine.
    "The Kremlin itself simply fell into a trap from which it
did not know how to get out," she said.
    "It was necessary to retreat and put on a good face (not
very successfully) when faced with a bad game. That is, Putin,
no matter how preoccupied he is with Ukraine, his historical
mission and his faith that he's right, remains a moderately
rational politician who knows how to retreat if necessary."
    The U.S. Ambassador to the United Nations, Linda
Thomas-Greenfield, told CNN she was "delighted" to hear about
Russia's return to the agreement.
    "They can't stand in the way of feeding the entire world,"
she said.
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 (Additional reporting by Ezgi Erkoyun in Ankara and other
Reuters bureaux; Writing by Philippa Fletcher; Editing by Angus
MacSwan and Peter Graff)