Why Russia Withdraws From Black sea Grain Deal With Ukraine; Effects On Nigeria, Other African countries

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By  Lateef Adegbite

This is not the best of times for the developing economies and the poor African and Asian Continent countries that solely depend on the    war torn Ukraine and Russia for their grain needs.  This because the Russian Kremlin which had terminated the yearlong grain deal with the neighbouring Ukraine had said that it would no longer guarantee the security of shipment of the country’s grain from the black seaports of Yuzhny  , Odesa and Chonomorsky,  to the Bosporus strait  in order to reach the global food market  without being attacked to ensure that weapons  were not being smuggled into Ukraine .  

The Russia Ministry of Defense may have hit the nail on the head  on Wednesday , July 19, 2023,  when it said that  ‘’it  would consider  any ship sailing around  the Ukrainian   seaports   used for export of its grains as a military target’. The Defense Ministry  was said to have also  issued  a warning  to the International   ship operators  and other grain importing nations from Ukraine   that any attempt  to bypass  the yearlong wartime blockade  might  be seen  as an act of war.

Ngozi Okonjo-Iweala: DG, WTO

 Ngozi Oonjo –Iweala, Nigeria’s former minister of Finance and Coordinator of the Economy during former President Goodluck’s Jonathan‘s Administration and now, Director General,, World Trade Organisation, WTO, who believes that Trade is key to ensuring food security in terms of crisis is worried that 100 export restrictions on food and fertilizer were imposed following the out- break of the Russia – Ukraine war.

The WTO, Director General, who could not hide her feelings, on Monday, July 17, 2023, had expressed her disappointment over Russia’s termination of the Black Sea Grain Initiative,that had allowed Ukraine to export grain from its Black seaports for the past year. She fears that with the termination of the Black Sea grain pact, global food security might become a casualty and that would be felt most severely by the poor African and Asian countries.

 Already, she has made it clear to members of the WTO, that the ‘’Black Sea trade  in food  and fertilizer needed to be protected in all its ramifications because ‘’it is critical to the stability of global food prices’’, noting that the earlier deal brokered by the UN and the government of Turkey,  in July 2022, had allowed food  and fertilizer, including  ammonia, to be exported in Commercial quantities from the Ukrainian ports of  of Odesa, Chornomorsk, Yuhny /Pivdennyi  in the Black sea.

Until, the Russia withdrew  from the grain deal, it was said to have repeatedly made it clear  to the Leadership of the United Nations, UN, and the WTO, that it would no longer comply with the black sea grain deal because it has been prevented by the Western nations’ sanctions which is holding up a parallel agreement  which had prevented the export of its own agricultural exports, let alone allow    payments and insurance to be made in its own local currency, Russian Ruble.    

. There indications that since the implementation of the Black Sea Grain Initiative, Russia had continuously allowed Ukraine grain export but the Western nations sanctions had prevented its own grain export to the  needy African and Asian countries. Going by the Food and Agricultural Organisation, FAO, data, in August , 2022, and now  Ukraine had exported  33 million tons of foodstuffs to the global food market.

Dimitry Peskv, the Kremilin spokesperson may have spoken the mind of Vladmir Putin, the Russian President, when he noted that the main objective of the grain deal –supplying grains to countries in need has not been realized , insisting that Russia will  no longer comply with the agreement which it has been terminated on Monday, July 17, 2023,. He had said that country could only comply with the deal as soon as ‘’the Russian part of the deal is completed’’.  

Guterres: Secretary General, UN

 Antonio Guterres, the UN, Secretary General, who may have read the handwriting on the wall that the Black Sea Grain Pact may be failed deal   that he has moved to save the world food prices from escalating that may hurt developing and poor economies in the African and Asian Continents.

The UN, Secretary General was said to have worked round the clock to find a dedicated solutions across the banking and private sectors that was said to have included building a ‘’bespoke payments mechanisms for the Russia Agricultural Bank outside  the SWIFT international banking network. The Russian Kremlin had reportedly said that the SWIFT access by the bank was a key factor that had influenced its decision’’ to terminate the deal’’.   

Aware that Russia may  not been treated fairly in the implementation of the grain deal  may have informed why the European Commission President would not  stop making   efforts  to get  grain  and other food products  and fertilizers, produced  from both Ukraine and Russia to be exported to the international grain markets for peace to reign.

Even the European Union, EU, which had imposed economic sanctions on Russian and had been behind Ukraine appears not to be finding the withdrawal of Russia from the black Sea grain deal funny as the union was said to be considering conneting  Rossekhozbank, a subsidiary  of the Russian Agricultural Bank  to the international  payment network  SWIFT to allow the grain  and fertilizer sanctions against Russia to be removed. Ursula Von der Leyen, President European, Commission was said to have urged the Kremlin to extend the Black Sea grain deal.

The Russian Kremlin may have turned a deaf ears to the European Commission President’s demands to extend the grain pact which could have helped ‘’to lower global food prices by at least 20%’’ by allowing export of Ukraine grain  to the world grain market.  

There is no gain saying the fact that Djibouti, Burundi, Mauritania, Togo, Cameroun, Senegal, Rwanda, Congo, Libya, Tanzania and Zambia including war torn Sudan, all African countries, which depend solely on the two warring countries for between 50% to 70% of their grain imports, particular, Corn and wheat, would be the worst hit  from the Russian withdrawal  from the Black sea grain deal.  Egypt , Madagascar and Somalia including Eretrea,  which also import between 70% to 90%   of their grain needs from Ukraine may  not be left out,  as the UN,  had described their situation  as not being  too  good.

Many believe that Russian’s withdrawal from the Black Sea grain deal with Ukraine had put a question mark on the country’s planned supply of 25,000 metric tonnes of grain to Nigeria in which the Rivers port, in PortHrcourt, has been selected as the hub for the grain Consignment.

The wheat Consignment, according to a ministry of Agriculture and Rural development source had been on the high sea following Russia’s extension of its supply of grains to the country through the UN’s agreement may have developed a K-leg with the Russian termination of the grain deal to force the Western nations to allow export of its grain to countries in need in Africa  and Asia.  

In spite of the withdrawals of Russia from the black sea grain deal with the neighbouring Ukraine, the north American country of the United States, US, had said that it will continue to work with the United Kingdom, UK, Germany and other the North Atlantic Treaty Organisation, NATO, member countries ’’ to ensure export ofUkraine grain to countries in need’’. The US government, according to informed diplomatic sources appears to be considering using military assets to help protect grain shipments from Ukraine to forestall attack from Russia Naval war ships.

Notwithstanding the US, plan B, to protect ocean –going vessels laden with grain from Ukraine Black seaports, Corn and wheat prices had remained high in the international market   due to the growing concern  about the disruption of grain supply by Russia.  

Agricultural experts would want the UN and the WTO, to act fast to bring back Russia to the Negotiating table to resolve the crisis to save  the Ukraine ‘s  grain, a commodity  vital  for its  own economy  and the world grain markets.

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