Russia suspends Ukraine grain deal. Here's what it means for the rest of the world
Updated July 17, 2023 at 11:36 AM ET
Russia is refusing to extend a U.N.-backed deal that has allowed Ukraine to export grain and other food items during the ongoing invasion.
Known as the Black Sea Grain Initiative, the agreement reached last July allowed for international shipments of corn, wheat, barley and other food products from three designated ports in Ukraine, which has been nicknamed the "breadbasket of Europe."
Experts say the deal — while imperfect — has helped stave off a worsening of global hunger and prevented a surge in food prices worldwide. U.N. Secretary-General António Guterres called the deal "a beacon of hope" when it was signed last summer.
Now its long-term future is unclear. Kremlin spokesman Dmitry Peskov told reporters on Monday that the agreement had "ceased to be valid" as of Monday.
Why is the deal being suspended?
The deal was set to expire on Sunday, but reports of a phone call between Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan, who brokered the deal, suggested Putin was entertaining the idea of an extension.
Moscow has been unhappy with the deal since its inception, saying that it failed to deliver on a promise to free up Russian agricultural exports that have been blocked by Western sanctions. While food and fertilizers are not under sanctions, Russia says sanctions-related restrictions on its banking, transit and insurance make trade untenable.
The U.N.'s Guterres pushed back against those claims in a press conference Monday, saying Russia's grain trade had "reached high export volumes" and its fertilizer markets were "stabilizing" under policies laid out in a memorandum of understanding between the U.N. and Russia last July.
This isn't the first time Russia has backed out of the Black Sea Grain Initiative.
In October, Russia suspended its participation for a few days following what Moscow claimed was a Ukrainian drone attack on its Black Sea fleet.
Another suspension looked possible in May, but the two countries agreed to a two-month extension of the deal just a day before it was set to expire.
In this case, it's unclear whether (and when) the deal could resume.
Guterres said the U.N. sent a letter to Putin last week with new proposed measures to address Russia's complaints, including allowing a subsidiary of the Russian Agricultural Bank to reconnect to SWIFT, the world's dominant financial messaging system.
Erdogan said on Monday that he also intends to speak with Putin in another phone call to discuss the deal before an anticipated meeting in Ankara in August. Turkey's president added that he believed Putin ultimately wants to maintain the deal.
Is this related to Monday's bridge attack?
The news that Russia had decided not to renew the grain deal came shortly after explosions along the Kerch Bridge, which connects the Russian mainland to the annexed Crimean peninsula.
Russian officials described the incident, which killed two people, as a "terrorist attack" staged by Ukraine special forces. Ukraine had not claimed responsibility for the attack as of Monday morning.
A spokesman for the Kremlin said the attack on the bridge was not related to the suspension of the grain deal.
What does this mean for Ukraine?
U.N. data shows that the last grain ship to leave a Ukrainian port departed Odesa early Sunday.
Ukrainian President Volodymyr Zelenskyy said that his country was prepared to continue operating under the initiative with the support of Turkey and the U.N., according to excerpts from an interview transcript shared by his press secretary Monday.
"Even without Russia, we need to do everything to ensure that we can use this Black Sea corridor. We are not afraid," Zelenskyy said, adding that his government had been approached by companies that own container ships with an interest in continuing exports.
Without Russia's support, those ships are not be guaranteed safe passage through the Black Sea.
What does this mean for the rest of the world?
The agreement has been a rare, if tenuous, diplomatic achievement in a conflict that has killed tens of thousands of people, displaced millions and unmoored the global economy.
But its impact reaches far beyond the conflict in Eastern Europe. The U.N. says the deal has helped ease a global food crisis, reducing food prices by over 23% since March 2022.
In its flagship report on global food security, which published Monday, the U.N. estimated that up to 783 million people faced chronic hunger in 2022 — roughly 9.2% of the world's population. That number is higher than pre-pandemic numbers in part because of the "consequences of the war in Ukraine," the report says.
Before the deal was in place, a Russian naval blockade of key Ukrainian ports prevented key exports such as wheat and sunflower oil from reaching world markets, causing prices to soar.
Already on Monday, wheat futures prices were rising, up by 3.5% to $6.84 a bushel in Chicago, the Wall Street Journal reported.
Under the agreement, ships from both sides could use a humanitarian sea corridor before facing inspections at a U.N.-run hub in Turkey.
The U.N. says the agreement has allowed for 1,003 voyages from the three Ukrainian ports, carrying a total of 32.8 million tons of grain and other food products.
Forty-five countries received grain shipments from Ukraine under the initiative. Asia saw 46% of the imports, while 40% went to Western Europe, 12% went to Africa and 1% went to Eastern Europe.
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